469_C330
INSURED
APPROPRIATELY USES APPRAISAL PROVISION TO CHALLENGE ROOF CLAIM
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Homeowner |
Appraisal |
On May 6, 2005, a windstorm struck Gervis Sadler’s home, causing damage
to his roof. On September 1, 2005, Sadler submitted a claim under his North Carolina
Farm Bureau Mutual Insurance Company homeowners policy. The insurer initially
denied the claim but later reassessed the damage and issued a check for
$3,203.03. Sadler did not cash the check because he was not satisfied with the
amount. He wrote to Farm Bureau on June 5, 2006, informing the insurer that he
intended to use the appraisal process described in his policy to determine
whether or not there was additional damage that should have been covered.
The relevant language of the policy stated: “If you and we fail to
agree on the value or amount of any item or loss, either may demand an
appraisal of such item or loss. In this event, each party will choose a
competent and disinterested appraiser within 20 days after receiving a written
request from the other. The two appraisers will choose a competent and
impartial umpire. If they cannot agree upon an umpire within 15 days, you or we
may request that a choice be made by a judge of a court of record in the state
where the insured premises is located.”
Within 20 days of his June 5 letter, Sadler hired an appraiser. Farm
Bureau did not. The trial court appointed an umpire on June 30. Farm Bureau
retained its own appraiser on July 31.
There was a substantial difference in the amount of damage to Sadler’s
home assessed by the two appraisers. Farm Bureau’s appraiser assessed the value
at $31,561.39. Sadler’s appraiser and the umpire agreed to an amount of
$162,500. Farm Bureau filed a complaint for declaratory relief, arguing that
Sadler’s appraisal award was not covered by the policy. Sadler counterclaimed,
alleging breach of the covenant of good faith and unfair claim settlement
practices. The lower court found that Sadler was entitled to $150,500 plus
interest; Farm Bureau appealed.
On appeal, Farm Bureau argued that Sadler violated the terms of his
policy by submitting an appraisal that not only provided the value of the loss
but also included the date and cause of the damage. The Court of Appeals of
Farm Bureau next argued that Sadler violated the terms of his policy
because he did not demonstrate that there was a genuine disagreement as to the
amount of the loss before he demanded an appraisal. Again the court disagreed.
It stated that Sadler’s failure to cash Farm Bureau’s check, and his statement
that he wished to use the appraisal process, were sufficient evidence that
there was a genuine disagreement.
Finally, Farm Bureau argued that Sadler had violated the policy terms
by prematurely asking the court to appoint an umpire. The court rejected this
argument as well. It found that appointment of an umpire before Farm Bureau
hired its appraiser was proper because Farm Bureau had not adhered to the
policy requirement of appointing an appraiser within 20 days of receiving
Sadler’s notification that he would be using the appraisal process.
The court concluded that the appraisal award agreed on by Sadler’s
appraiser and the umpire was valid and binding. Thus the decision of the lower
court was affirmed.
North Carolina Farm Bureau Mutual Insurance
Company, Inc., vs. Sadler-No. COA09-1054-Court of Appeals of North Carolina-May 18, 2010-693 South
Eastern Reporter 2d 266