In a case of first impression, the Iowa Court of Appeals held that an appraisal may determine issues of causation. North Glenn Homeowners Association v. State Farm Fire & Cas. Co., 854 N.W. 2d 67 (Iowa Ct. App. 2014).

   On July 15, 2009, North Glenn Homeowners Association submitted a claim to State Farm for hail damage on the roof. The claim was paid. North Glenn did not repair all of the damage, instead deciding to use some of the money to make other repairs to the property.

   A second storm hit the development on March 22, 2011, and a second claim was submitted to State Farm for wind and hail damage. An inspection by State Farm determined the hail damage was from the 2009 storm and was not covered. The wind damage was estimated to be less than the policy deductible.

   North Glenn demanded an appraisal. State Farm agreed to an appraisal of the wind damage, but refused an appraisal of the hail damage. North Glenn sued for a declaratory judgment, seeking a determination of coverage issues and seeking an order for appraisal. North Glenn's motion for appraisal was granted. The trial court found that the appraisal clause required appraisers to examine the loss, which necessitated consideration of any prior loss which occurred or was no longer covered.

   An interlocutory appeal was filed and the court of appeals affirmed. The dispute was over both what caused damage to the roof and whether that damage was covered under the policy or excluded because of North Glenn's prior compensation. A number of states had decided that appraisers have no authority to consider issues of causation. Other states disagreed and held that appraisers, under certain circumstances, may consider causation.

   The court of appeals favored the latter result. As part of the appraisal process, appraisers had to determine what the amount of "loss" was, which often required consideration of causation. Causation was an integral part of the definition of loss, without consideration of which appraisers could not perform their assigned function. During the appraisal process, appraisers had to consider what damage was caused by hail, and what damage was not, or any damage with which they were unconcerned, such as normal wear and tear. Once the appraisal was completed, the matter could be further litigated. Further, the causation determinations by the appraisers were subject to further review by the court.