Texas Insurance Law Newsbrief - October 4, 2023

Texas Insurance Law Newsbrief


The Court of Appeals of Texas, Fort Worth, rejected the insured’s argument that the appraisal umpire exceeded his authority or made a mistake, and affirmed the trial court’s summary judgment in favor of the insurer.

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In Stewart v. Texas Framers Ins. Co., No. 02-23-00041CV, 2023 WL 6300726 (Tex. App.—Ft. Worth, Sept. 28, 2023) (mem. op.), Stewart’s house was damaged in a storm in March 2016. The adjuster with Stewart’s insurer, Farmers, estimated that the amount of damage was below Stewart’s $1,995 deductible.  Stewart disagreed, and consequently sued Farmers for breach of contract, breach of the duty of good faith and fair dealing, and violations of the Texas Insurance Code. Stewart subsequently invoked the appraisal provision of his insurance contract, and he and Farmers each appointed an appraiser to resolve the value of the loss. However, Stewart's and Farmers' appraisers could not agree on the value of the loss, so an umpire was appointed to value the loss. The umpire issued an appraisal that was also below Stewart's deductible. 

Subsequently, Farmers moved for summary judgment. In response, Stewart moved to set aside the appraisal award.  Stewart first contended that because Farmers’ appraiser emailed the umpire attachments containing what the appraiser described as “additional information regarding the interior damage addressed back in 2007”, the umpire considered information regarding prior damage to the house, thereby improperly resolving a coverage issue.  Second, the umpire did not personally inspect the property and, thus, mistakenly assumed that the damages presented were the same as those sustained in the previous loss. The trial court denied Stewart's motion to set aside the appraisal award, and granted summary judgment for Farmers.

On appeal, the court began its analysis by stating the relevant law: “An appraisal award made pursuant to the terms of an insurance contract will not be set aside unless it was made without authority or as the result of fraud, accident, or mistake. Every reasonable presumption will be indulged to sustain an appraisal award, and the burden of proof lies on the party seeking to avoid the award.”

The court concluded that both of Stewart’s contentions were speculation, and affirmed the trial court’s summary judgment.  The court reasoned that “there was no evidence of what the umpire thought about the ‘additional information,’ no evidence of whether the umpire relied upon it, and no evidence that it influenced the appraisal award in any manner. The umpire's receipt of an email with attachments regarding “interior damage ... addressed back in 2007’ does not show or imply that the umpire made a specific causation decision regarding what caused the damage to Stewart's house and whether it was covered by Stewart's policy.” “The umpire's decision not to personally inspect Stewart's house is no evidence that he assumed anything in particular regarding the damages to that house. Plus, there is no explicit requirement that the appraisers and umpire inspect the property ..., and many do not.”

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