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Arizona circumstances point out that causation can’t be decided in an appraisal. However can an appraisal go ahead to find out the prices of the hypothetical coated injury? It might seem to be an enormous waste of time because the causation situation must be litigated. However, a federal court docket was confronted with this situation.1
The court docket dominated that causation couldn’t be decided by the appraisal panel:
The appraisal provision states, in pertinent half, ‘if we and also you disagree on the quantity of loss, both could make written demand for an appraisal of the loss.’ The availability describes an neutral course of involving two appraisers and an umpire to settle variations within the valuations of the property injury. Arizona Courts have decided that an appraisal clause solely permits the events to find out the quantity of injury by an appraisal and to not resolve questions of protection by such a continuing.
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…The Arizona Court docket of Appeals additional concluded that ‘the appraisers had been licensed to find out solely a query of reality, particularly, the precise money worth of the insured constructing.’ Thus, in San Souci Flats, the Court docket concluded that the ‘situation of whether or not the roof tiles had been broken by the hail storm and whether or not the supply of the injury is outdoors of the coverage limits will not be a dispute concerning the quantity of loss that each one events conform to be coated’ and was not throughout the scope of the appraisal provision.
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Right here, in finest gentle to Plaintiffs at this stage, the dispute between the events facilities on which structural engineer’s opinion, Plaintiffs’ structural engineer or Defendant’s structural engineer, is appropriate concerning the reason for the inspiration issues for which Plaintiffs search compensation from Defendant. Arizona legislation doesn’t ponder an appraiser’s central function as arbiter of which structural engineer’s opinion is appropriate. Appraisal will not be acceptable to find out whether or not or not the fridge line leak triggered the inspiration issues or whether or not these issues resulted from different, unrelated causes.
But, the court docket allowed the appraisal to go ahead to determine the quantity of the damages:
However, on the report earlier than the Court docket, the Court docket can’t conclude that there isn’t a dispute between the events regarding the price of repairs to the inspiration and associated repairs. Defendant has not clearly said that it’ll settle for Plaintiffs’ loss quantity for basis and basis associated repairs if protection is established. Underneath the insurance coverage contract written by Defendant, Plaintiffs are entitled to an appraisal concerning the price of basis and basis associated repairs. The Court docket will compel an appraisal per the phrases of the Coverage and per the ‘robust desire in favor of permitting [Plaintiff] to invoke the appraisal clause.’
There can be an appraisal award for the damages, and the protection can be decided in litigation.
Thought For The Day
The Arizona desert to us is starkly stunning always, however when touched by the magic of Spring it turns into a land of enchantment.
—Raymond Carlson
1 Henderson v. Liberty Mut. Ins. Co., No. 1:23-CV-00670 (D. Ariz Aug. 8, 2023).
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