Last week, the United States District Court for the Southern District of Texas granted Allstate’s motion for summary judgment, based on Allstate’s payment to the insured of the appraisal award.  In White v Allstate Vehicle and Property Ins. Co., No. 6:19-CV-00066, 2021 WL 4311114 (S.D. Texas, Sept. 21, 2021, mem. op.), Chris White's dwelling was damaged during Hurricane Harvey in August 2017. White filed a claim under his homeowner's insurance policy with Allstate. Subsequently, Allstate’s adjusters inspected the damage, issued repair estimates, and paid White in November of 2018. Unsatisfied, White sued Allstate asserting claims of breach of contract and bad faith. 

In September of 2019, White invoked the appraisal process under the policy. Allstate declined White’s request for appraisal, asserting that White waived his right to the appraisal process due to his delay in invoking it. White subsequently filed a motion to compel appraisal, which the court granted. The appraisal process was conducted and concluded that the covered damages were greater than the amount Allstate initially estimated.  Allstate paid White this greater amount less the deductible and the amount it had already paid based on the initial estimate. Then, Allstate filed a motion for summary judgment, which the court granted.   

The Southern District quickly dismissed White’s claim of breach of contract, as Allstate paid White the amount agreed upon by both appraisers shortly after the appraisal process concluded.    “[W]hen an appraisal clause states that an appraisal shall determine the amount of loss under an insurance policy, the insurer's payment of the appraisal award bars the insured's breach of contract claim premised on failure to pay the amount of the covered loss.”

Allstate also contended that payment to White also barred recovery of the extra-contractual claims. White contended that payment of the appraisal amount did not mean that Allstate fairly and properly handled his insurance claim. The court concluded that White could not recover on his bad-faith claim because he did not sustain actual damages or an injury independent of his right to recover policy benefits.  That is, the harms White claimed he suffered because of Allstate's alleged bad faith all stemmed from the dispute over his proceeds under the policy. The court determined that “Such benefits are not independent injuries as a matter of law.”       

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