Appraisal Whiplash: Court Rules You Can’t Back Out Once You’re In

The recent Oregon federal court decision in Wilson v. Liberty Insurance Corporation serves as a stark reminder that invoking appraisal may be a one-way street with no turning off or around allowed. 1 The case offers important lessons for policyholders, insurers, and their representatives about the binding nature of appraisal provisions once triggered.

When Kimonti Wilson discovered water damage to her kitchen and basement in June 2023, she likely didn’t anticipate the procedural maze that would follow. After Liberty Insurance only paid about $18,000 on what Wilson claimed was a $112,000 loss, she invoked the policy’s appraisal provision in January 2024.

After both parties selected their appraisers and an umpire, Wilson attempted to withdraw from the appraisal process, citing:

Significant delays in the umpire selection process
The insurer’s appraiser’s uncooperative behavior
Unnecessary cost escalation
Poor communication

Magistrate Judge Beckerman wasn’t buying these arguments. The court ruled that under Oregon appraisal law, once both parties demonstrate agreement to appraisal through their actions, it becomes a binding condition precedent to litigation. The judge found that:

The delays weren’t substantial (only 4 days beyond the 15-day target for umpire selection)
The appraiser’s communication issues, while not ideal, didn’t prevent the completion of the process.
Both parties’ actions aligned with the policy’s appraisal provisions.

This ruling highlights several critical considerations for those contemplating appraisal as the means to resolve a disagreement about the amount of loss:

Think carefully before invoking appraisal – if the matter is not moving along quickly or in a manner that you predicted it would, you cannot just stop.
Document all communications and delays meticulously—but as Liberty pointed out, the first remedy to fix these is with the umpire.
Minor procedural friction is never going to allow the withdrawal of an agreement to appraise the loss.

For those of us representing policyholders or insurers, this case highlights the importance of carefully considering the strategic and legal implications of invoking appraisal. I think the case holding is important because if a party contemplates that an appraisal panel may not be inclined to agree with its position, parties may try to sabotage the appraisal process, seeking a remedy through litigation.

The lesson? Choose your path wisely because in appraisal, as in life, there may be no U-turns allowed if things are not working out as you first planned.

Thought For The Day

I think it’s important to reason from first principles rather than by analogy… you boil things down to the most fundamental truths and then reason up from there.
—Elon Musk

1 Wilson v. Liberty Ins. Corp., No. 3:24-cv-00826 (D. Or. Nov. 1, 2024).