Federal Court Finds Prejudice Required for Insurer to Waive the Right of Appraisal

J.P. Gonzalez-Sirgo
Founder of J.P. Gonzalez-Sirgo, P.A.

This blog recently focused on a series of cases that evaluated when the conduct of an insured constitutes a waiver of the contractual right of appraisal.  While this series of cases might have created the impression that the issue of waiver of appraisal rights is limited to the insured, there are circumstances when an insurer will seek to compel an insured to submit to the appraisal process.  This blog post looks at the issue of waiver of appraisal rights from the perspective of the insurer.

In a federal court case out of Texas, Dike v. Valley Forge Insurance Company, the court considered whether the insurer’s compliance with the provisions of the Texas Insurance Code and the claims handling provisions of the policy were conditions precedent for the insurer to compel appraisal.  In the case, the insured filed a claim for proceeds of hurricane coverage stemming from damage to the insured’s business.  The insured sought both lost rental income and business interruption losses.

The court determined that the failure by the insured to comply with the policy claims process and state insurance laws did not constitute conditions precedent.  The court indicated:

“In order to determine whether a condition precedent exists, the intention of the parties must be ascertained, and that can be done only by looking at the entire contract . . . . In order to make performance specifically conditional, a term such as “if”, “provided that”, “on condition that”, or some similar phrase of conditional language must normally be included . . . . While there is no requirement that such phrases be utilized, their absence is probative of the parties’ intention that a promise be made, rather than a condition imposed.”

The court found that the appraisal clause in the policy did not include language indicating an intention to make compliance with the claims process and state insurance law conditions.  As with the waiver of appraisal by an insured, the court indicated that mere delay is not sufficient to constitute a waiver.  According to the court, waiver is an intentional relinquishment of rights.   The court explained:

“To constitute waiver, the acts relied on must be such as are reasonably calculated to induce the assured to believe that a compliance by him with the terms and requirements of the policy is not desired, or would be of no effect if performed.  The acts relied on must amount to a denial of liability, or a refusal to pay the loss.”

The court reasoned that this means a waiver does not occur unless the insured has been prejudiced by the delay.   The issue of waiver of appraisal rights is just one of many complex issues that might arise when an insured pursues a property damage claim.  If you have submitted an insurance claim that is not being handled in a timely manner by your insurance carrier, an experienced insurance claims attorney can advise you of your options.

If you have questions about Miami-Dade homeowners claims, you are welcome to contact my Florida insurance claims dispute law firm.  My law firm represents policyholders in claims disputes in Miami and throughout Florida.  The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations.  No Recovery, No Lawyer Fees.  Call 305-461-1095 or Toll Free 1-866-71-CLAIM.

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