An insurance company’s refusal to appraise a disputed loss “was done in bad faith” according to a Minnesota Judge.
In the recent Anoka County case of Klimmek v. North Star Insurance, a policyholder demanded appraisal (a dispute resolution mechanism available in every Minnesota policy to resolve disputed claims outside of court). The insurance company refused to participate because it did not like her named appraiser, and that despite receiving her contractor’s estimate, proof of loss, and hundreds of pages of documents, it allegedly still needed the legal discovery process to determine what was in dispute.
There is over one century of law in Minnesota upholding a policyholder’s right to appraisal and to avoid litigation entirely, so SJJ stepped in to enforce that right on behalf of the policyholder. SJJ brought the matter before the Court and it agreed with SJJ and held that the insurance company “breached its duty under the contract, and under state law, by refusing [to] engage in the appraisal process.” The Court noted that a contractor’s estimate was sufficient to establish the parties did not agree on the amount of loss and no further information was needed. The Court concluded that the insurance company’s “conduct in this matter; its refusal to engage in the very process meant to resolve disputes as to the amount of loss, was done in bad faith.”
Ultimately, an insurance company cannot indefinitely delay the appraisal process by continuously claiming that it needs to further investigate the loss. Competing estimates is enough to show that there is a disagreement as to the amount of loss, and appraisal is appropriate to resolve that. This was a big win for the policyholder who can now avoid the costs and delays of litigation so she can get her home repaired.
If you are having issues dealing with your insurance company regarding your claim for property damage, contact Smith Jadin Johnson for a free case evaluation.