Washington’s federal courts proceed to implement appraisal as a dispute-resolution mechanism the insurer should honor. The latest resolution in Cory v. USAA Normal Indemnity Firm 1 is a textbook instance. The Corys suffered a considerable loss, submitted a supplemental estimate exceeding USAA’s funds by lots of of 1000’s of {dollars}, and invoked the appraisal clause to resolve what they seen as an easy disagreement over the quantity of loss.
USAA twice refused to take part within the appraisal, which pressured the owners into litigation. As soon as the difficulty reached a decide, the court docket took a cautious have a look at the arguments on either side and concluded that appraisal was not solely applicable however required.
The owners’ place in their briefing was rooted within the plain textual content of the coverage and Washington legislation. They identified that the appraisal clause is unambiguous: if the events fail to agree on the quantity of loss, both facet might demand an appraisal. They emphasised that Washington courts have repeatedly upheld appraisal as an environment friendly, expert-driven course of meant to deal with valuation disputes, not protection questions. They famous that appraisal doesn’t deprive the court docket of authority. As a substitute, it merely narrows the problems by resolving the factual query of how a lot the loss is price. They additional highlighted that USAA had not supplied significant estimates to justify its decrease funds and had provided no legally grounded cause for rejecting their invocation of appraisal.
USAA tried to recast the dispute as one thing past valuation. In its response, the insurer argued that the disagreement didn’t heart solely on the fee to restore or exchange the property however concerned points the appraisal panel was not approved to resolve, equivalent to neglect, defective workmanship by the insureds’ distributors, and whether or not sure ordinance-and-law prices had been truly incurred. USAA additionally argued that further dwelling bills weren’t topic to appraisal in any respect and that the non-public property dispute turned not on worth however on whether or not objects had been broken by lined causes or by post-loss dealing with. In essence, USAA urged the court docket to conclude that appraisal could be “ineffective” as a result of the true struggle was about protection, circumstances, and causation fairly than the {dollars} and cents of restore prices.
Choose Evanson was not persuaded. The court docket acknowledged that appraisal can not resolve protection questions, nevertheless it emphasised the equally vital precept that the existence of protection points doesn’t remove a real valuation dispute. USAA, the court docket famous, had failed to offer authority for the concept that appraisal is correct provided that it resolves all excellent disagreements between the events. Washington legislation doesn’t assist such a slender interpretation. The court docket noticed {that a} vital hole remained between the events’ valuations, and nothing USAA raised demonstrated that appraisal would serve no helpful objective. Figuring out the quantity of loss, the court docket reasoned, shouldn’t be solely approved however useful, because it lays the muse for no matter protection disputes might comply with and streamlines the trail towards final decision.
The result’s a reaffirmation of the appraisal course of as a significant, enforceable contractual instrument. When insurers try and keep away from appraisal by dressing valuation disputes in protection clothes, courts might even see via it. They appear to the coverage language, the aim of appraisal, and the lengthy line of Washington precedent favoring its use. Choose Evanson’s ruling refused to let an insurer sidestep a mechanism designed to advertise equity and effectivity over arguments that coverage language remains to be in play.
For policyholders, claims professionals, and public insurance coverage adjusters, this resolution exhibits the significance of recognizing when appraisal is acceptable and insisting on its enforcement when insurers resist. Appraisal can not reply each query in a declare, however it may well reply a pivotal one: “What’s the quantity of loss?” And as soon as that query is resolved by consultants, the court docket can flip to the remaining authorized points with a clearer, extra dependable factual report.
Thought For The Day
“A promise made is a debt unpaid.”
— Robert Service
1 Cory v. USAA Normal Indemnity Co., No. C25-5452, 2025 WL 2581862 (W.D. Wash. Aug. 12, 2025).