Background
Cesar and Luz Fernandez reported a property-damage claim to People’s Trust Insurance Company in September 2022 for damage allegedly sustained the preceding March. After inspecting the property, the insurer estimated covered repairs at $947.51—below the policy’s $1,000 deductible. Its coverage letter extended coverage for roof damage but not bathroom-ceiling damage and stated that no repairs or payment would be made unless the parties agreed on a covered loss exceeding the deductible or an appraisal panel found a loss exceeding it.
More than two years later, the homeowners submitted a repair estimate of $149,866.98. People’s Trust maintained its coverage determination, offered $100 to settle after receiving a notice of intent to litigate, and later closed the claim. The homeowners sued for breach of contract. In its answer, People’s Trust raised the policy’s appraisal provision as an affirmative defense and, six days later, moved to compel appraisal. The circuit court denied the motion, finding the insurer had waived appraisal through conduct inconsistent with that right.
The Court’s Holding
The Fifth District reversed. It held that an insurer may invoke contractual appraisal after litigation begins, and that waiver turns on active participation in the lawsuit or conduct inconsistent with appraisal—not on whether the insurer demanded appraisal before suit.
People’s Trust did not waive appraisal. Its $100 pre-suit settlement offer was not, by itself, inconsistent with appraisal, and the insurer promptly asserted appraisal in its answer and moved to compel it shortly after the complaint was filed. The court remanded with instructions to grant the motion to compel appraisal.
Key Takeaways
- An insurer can first invoke a policy’s appraisal clause after the insured files suit.
- A settlement offer alone does not waive appraisal rights.
- Promptly pleading appraisal and moving to compel it supports a finding of no waiver.
Why It Matters
The decision reinforces that pre-suit claim handling, including maintaining a below-deductible position, closing a claim, and making a settlement offer, does not itself forfeit an insurer’s appraisal right. The key question is whether the insurer later litigates inconsistently with appraisal.
For property-insurance litigants, the case underscores the importance of promptly asserting and seeking enforcement of appraisal once suit is filed.