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RSJ Helps Define The Role Of Appraisals in Wisconsin

RSJ attorneys Alexander Jadin and Jerri Adams assisted a property owner in vacating an improper appraisal award in St. Croix County, Wisconsin.   The appraisal award was vacated by the Circuit Court level and the insurance company appealed.   The Wisconsin Court of Appeals District lll affirmed the Circuit Court decision in the matter St. Croix Trading Company/Direct Logistics, LLC. v. Regent Ins. Co., Court of Appeals of Wisconsin, May 24, 2016, 2016 WL 2975032, and further expanded its ruling to encompass the role and authority of appraisal panels. 

Issue of whether an appraisal vacate should be overturned. 

The Appeals Court agreed with the Circuit Court that the appraisal panel exceeded its authority in making a coverage determination at the appraisal. Because the panel exceeded its authority by determining coverage issues, the appraisal award must be vacated. 

Importantly, the Wisconsin Court of Appeals examined and relied on the Minnesota Supreme Court case Quade v. Secura for the proposition that an appraisal panel has the authority to determine the cause, scope and amount of loss, and the determination of coverage is left for the Court.

The Minnesota Supreme Court upheld the District Court's order for appraisal, but limited the prospective panel's considerations to questions of fact (causation), rather than questions of law (coverage):

After reading the appraisal clause in the context of the insurance policy as a whole, we conclude that the phrase "amount of loss" is not ambiguous, because it is susceptible to only one interpretation.  Specifically, in the insurance context, an appraiser's assessment of the "amount of loss" necessarily includes a determination of the cause of the loss, and the amount it would cost to repair that loss...

We generally agree that appraisers have authority to decide the "amount of loss" but may not construe the policy or decide whether the insurer should pay.... An appraiser can make no legal determinations .... We believe that under the circumstances of this case a determination of the "amount of loss" under the appraisal clause necessarily includes a determination of causation.  Coverage questions, such as whether damage is excluded because it was not caused by wind, are legal questions for the Court. 

While it is still to be determined as to the ultimate impact of this decision, this should have a substantial impact on the scope and issues addressed via appraisal. Because of the cost and time savings to both policyholders and insurance companies this is positive progress for policyholders.  

If you have issues with your insurance claim contact RSJ today.  

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