Opinion ID: 2167431
Heading Depth: 2
Heading Rank: 3

Heading: When should appraisals be reviewed?

Text: Even if the appraisal here turns out to involve not just damage but liability questions, that does not mean appraisal should be prohibited as an initial matter. This case comes to us in an unusual posture. At least a dozen Texas cases involve appraisals of hail damage, every one challenging an appraisal after it had taken place. [41] By contrast, this appraisal has yet to occur. That makes a big difference for several reasons. First, appraisal is intended to take place before suit is filed; this Court and others have held it is a condition precedent to suit. [42] Appraisals require no attorneys, no lawsuits, no pleadings, no subpoenas, and no hearings. It would be a rare case in which appraisal could not be completed with less time and expense than it would take to file motions contesting it. Allowing litigation about the scope of appraisal before the appraisal takes place would mark a dramatic change in Texas insurance practice, and surely encourage much more of the same. Second, in most cases appraisal can be structured in a way that decides the amount of loss without deciding any liability questions. As already noted, when an indivisible injury to property may have several causes, appraisers can assess the amount of damage and leave causation up to the courts. When divisible losses are involved, appraisers can decide the cost to repair each without deciding who must pay for it. [43] When an insurer denies coverage, appraisers can still set the amount of loss in case the insurer turns out to be wrong. [44] And when the parties disagree whether there has been any loss at all, nothing prevents the appraisers from finding $0 if that is how much damage they find. Third, the scant precedent involving disputes about the scope of appraisal suggests that appraisals generally resolve such disputes. The final appraisal award here may substantiate State Farm's claim that only the ridgeline suffered hail damage, or reach some in-between figure that proves acceptable to all concerned. Litigating the scope of appraisal is wasteful and unnecessary if the appraisal itself can settle this controversy. Finally, even if an appraisal award is flawed, that can be easily remedied by disregarding it later. Thus, when insureds objected to appraisal procedures that were allegedly inaccurate, unreliable, and biased, we held in 2002 that the appraisal should go forward and the results could be challenged later if the insureds were dissatisfied. [45] If an appraisal is not an honest assessment of necessary repairs, that can be proved at trial and the award set aside. [46] But in every property damage claim, someone must determine the amount of loss, as that is what the insurer must pay. An appraisal clause binds the parties to have the extent or amount of the loss determined in a particular way. [47] Like any other contractual provision, appraisal clauses should be enforced. There may be a few times when appraisal is so expensive and coverage is so unlikely that it is worth considering beforehand whether an appraisal is truly necessary. [48] But unless the amount of loss will never be needed (a difficult prediction when litigation has yet to begin), appraisals should generally go forward without preemptive intervention by the courts.