The District Court for the Northern District of Illinois recently reaffirmed that a policyholder is bound by a validly issued appraisal award and cannot sue when it disagrees with the amount of the award.
In July 2020, the policyholder, a condominium association, presented a claim to its carrier for damage to roofs and other building components caused by wind and hail. The parties disagreed over the amount of loss, with the policyholder contending that the damaged roofs all required complete replacement. The policyholder demanded appraisal, and the appraisal panel ultimately issued an award reflecting a finding that the roofs did not require complete replacement.
Following the appraisal award, the policyholder filed suit, alleging that the carrier breached the insurance policy by failing to adequately compensate it for the damage. The court held, consistent with the language of the relevant appraisal provision, that a decision agreed to by any two members of the appraisal panel is binding on the parties. According to the court, the term “binding” is “sufficiently clear and unambiguous to constitute a waiver of a party’s right to sue.”
Read the opinion here.
Appraisal remains an important and rapidly evolving issue across the United States. If you have any questions or would like additional information, please contact any member of HKR’s team.