In California, lacking the 100-day deadline to problem an appraisal award below the state’s arbitration-style appraisal legislation can immediately finish an insurance coverage dispute, regardless of how robust the declare. A latest California post-appraisal ruling in Bansal v. Nationwide Mutual Insurance coverage Firm 1 gives an vital reminder concerning the penalties of appraisal and the strict procedural guidelines that govern it in California. Earlier this 12 months, I made the next comment in Don’t Just like the Appraisal Award? Right here’s Why That’s Not Sufficient to Keep away from Its Finality, which is relevant to this case:
The appraisal course of is just not a trial run or a preliminary negotiation. It’s normally the tip of the highway. Those that enter it should accomplish that with seriousness, understanding that the result will probably be remaining and enforceable.
The California insurance coverage dispute arose from a July 2021 water leak within the Bansals’ dwelling. After preliminary funds, disagreement over the scope and price of repairs led to a contractual appraisal. The appraisal panel awarded $165,000 for substitute value, which Nationwide paid in full. The insureds then sought extra quantities for shifting bills, short-term housing, meals prices, honest rental worth, and appraisal charges. Nationwide moved for abstract judgment, contending it had paid all lined quantities and that the appraisal award barred any additional restoration for repair-related prices.
Nationwide’s place was that the appraisal award encompassed all building-related bills below Protection A, together with shifting and pack-out prices crucial to finish the repairs. It additionally argued that extra dwelling expense claims have been both time-barred below the coverage’s 24-month restrict or unsupported by correct documentation. The short-term housing declare concerned Airbnb stays greater than two years after the date of loss and after the award’s five-month interval of restoration, whereas the meals expense declare lacked proof of the insureds’ regular pre-loss prices, making it unimaginable to calculate the mandatory enhance lined below the coverage.
As for honest rental worth, Nationwide pointed on the market was no proof the property was rented or held for rental on the time of loss. It additionally asserted that with out a breach of contract, there could possibly be no dangerous religion, and that the real dispute doctrine additional insulated it from legal responsibility.
The policyholders countered that shifting prices weren’t a part of the appraisal as a result of the panel was solely licensed to find out restore prices to the dwelling, not extra dwelling bills. They argued that late documentation of short-term housing and meals prices didn’t mechanically defeat protection, as California legislation requires the insurer to point out substantial prejudice from late discover. They maintained that they by no means completely relocated to their second dwelling and solely rented the Airbnb to supervise repairs, and that they supplied an inexpensive methodology to estimate meals value will increase when actual pre-loss receipts have been unavailable.
In addition they claimed entitlement to honest rental worth based mostly on their intent to lease the property as soon as repairs have been full. Lastly, they contended that delays, repeated requests for paperwork, and an unduly slender studying of the coverage amounted to dangerous religion and justified punitive damages.
The courtroom sided totally with Nationwide. It concluded that below California legislation, which treats appraisal as a type of contractual arbitration, the award was remaining and binding absent a well timed petition to vacate or modify inside 100 days, as required by California legislation. As a result of the insureds had demanded that the panel appraise your entire loss to the dwelling, and shifting prices have been essential to facilitate repairs, these bills have been a part of the award.
The short-term housing declare was denied by the courtroom as a result of the prices have been incurred outdoors the coverage’s cut-off dates and with out well timed documentation. The meals expense declare failed for lack of proof of the rise above regular prices, and a few of the claimed bills have been unrelated to the loss. Truthful rental worth was denied as a result of the property was neither rented nor held for rental on the time of loss. With out a breach of contract, the dangerous religion and punitive injury claims additionally failed.
This case has a number of classes for policyholders and public adjusters. In California, appraisal is ruled by statutory arbitration guidelines, not the widespread legislation, and the statutory deadlines for difficult an award are unforgiving. As soon as an award is issued, any repair-related value not expressly excluded is more likely to be deemed resolved, so events have to be clear about what’s included within the appraisal demand.
Further dwelling expense claims require each immediate documentation and proof of the rise over regular prices. Coverage cut-off dates, such because the 24-month cap on ALE, are sometimes strictly enforced, and it’s harder to acquire them as consequential injury in a foul religion lawsuit. As a result of some jurisdictions won’t entertain dangerous religion damages if there is no such thing as a breach of contract based mostly on the insurer’s well timed cost of an appraisal award, preserving the precise to assert advantages within the contract motion or appraisal is important.
From a sensible standpoint, the insurer actually paid far too little on its preliminary cost in relation to the ultimate appraisal award. Nonetheless, the general public adjuster’s demand was equally too excessive. The appraisal panel practically cut up the 2 views within the center. This level, together with the dearth of cooperation and documentation not supplied by the policyholders, clearly impacted the courtroom’s view of the case.
Thought For The Day
“California is a backyard of Eden, a paradise to stay in or see; however consider it or not, you gained’t discover it so sizzling should you ain’t bought the do re mi.”
—Woody Guthrie
1 Bansal v. Nationwide Mut. Ins. Co., No 23-cv-05527 (N.D. Cal. Aug. 10, 2025).