September 28, 2021

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Jury to Decide if Adjuster’s Instruction to Insured Waived Date of Loss

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Stone Creek Condominium Owners Association, Inc. (“Stone Creek”),1 suffered a hail loss in 2016 for which it submitted a claim to its property insurance carrier, Charter Oak Fire Insurance Company (“Charter”). Charter inspected and issued payment in accordance with its estimate. Charter determined that four of the twenty buildings had sustained damage, although no damage was noted to any of the roofs.

In 2017, Stone Creek hired a contractor to replace the roofs of certain buildings. Upon inspection, the contractor reported extensive hail damage to the roofs and other portions of the building not included in the 2016 claim estimate. Approximately one year later, Stone Creek hired a public adjuster who initially requested a sixty-day extension with Charter of the two-year filing bar under the policies to resolve any outstanding issues presented by the discovery of hail damage. Charter granted the initial request. Thereafter, Stone Creek’s public adjuster requested an additional extension to allow for a re-inspection. Charter’s adjuster responded advising the public adjuster that there had been 12 events since Charter’s initial inspection in 2016 and that:

[T]here is no way for us to reinspect what damages were there at that time. The Association should report a new claim and use the hail date that was closest to the date of the inspection by the contractor.

Following an exchange of estimates by the public adjuster and Charter, Stone Creek demanded appraisal. Charter’s response advised Stone Creek that it was willing to go to appraisal on issues of pricing and whether additional undamaged areas of roofing must be replaced in order to complete the repairs authorized by Charter, but it would not consider coverage issues related to “matching” or causation in the appraisal process. Instead of responding, Stone Creek filed suit. Stone Creek’s lawsuit included a declaratory judgment action that alleged Charter violated by the policy by not allowing the appraisal panel to set the amount of the loss.

The parties filed cross motions for summary judgment on this issue. Charter argued that it did not violate the policy by refusing to participate in appraisal because (a) there was a dispute as to the cause of damage and (b) the appraisal process was limited to resolving disputes about the amount of loss. Stone Creek, in turn, argued that Charter breached the policy since the appraisal panel could determine causation.

The trial court agreed with Charter that the appraisal provision limited the panel to determining the amount of the loss and did not include resolving coverage disputes including whether damage to Stone Creek’s roofs were caused by a hailstorm within the coverage period, and that it is a disputed issue of fact for a jury to determine at trial. The court further concluded that the jury would also need to consider whether Charter credibly raised coverage disputes in response to Stone Creek’s invocation of the appraisal provision. In particular, the jury would need to consider whether Charter raised a dispute as to coverage in challenging the alleged date of loss. In other words, the jury would need to consider whether Charter waived any date of loss challenge by virtue of its adjuster’s instruction to “report a new claim and use the hail date that was closest to the date of the inspection by the contractor.”
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1 Stone Creek Condominium Owners Association, Inc. v. Charter Oak Fire Ins. Co., 3:19-cv-862, 2021 WL 354180 (W.D. Wis. Feb. 2, 2021).

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