How long can an insurer wait after denying coverage before insisting upon an appraisal? In Sanchez v. Prop. and Cas. Ins. Co. of Hartford, No. H-09-1736, 2010 U.S. Dist. LEXIS 6295 (S.D. Tex. Jan. 27, 2010), waiting eleven months after a coverage dispute became clear waived the insurer's right to invoke an appraisal.
The insured's home was damaged by Hurricane Ike on September 12, 2008. In late October, the insured reported a claim to Hartford. The claim encompassed wind damage to the back door and to a pipe stack on the roof. Wind damage was also reported as the cause of cracking of bricks on the outside of the house and for damage to sheetrock on the interior walls. A Hartford claims adjuster inspected and concluded that only the damage to the back door was covered. Therefore, she concluded the total amount of damage was only $150, which was below the deductible of $5,850. A letter declining to make any payment was then sent by Hartford. An enclosed itemized repair estimate failed to address damages to the exterior and interior walls, and the pipestack on the roof.
On November 1, 2008, the insured called and complained to the Hartford adjuster that she had failed to consider all of the damage. The adjuster responded that other areas were excluded because the damage was not caused by the Hurricane.
On April 29, 2009, the insured filed suit. On October 15, 2009, Hartford wrote the insured seeking to invoke the policy's appraisal clause. After the insured objected, Hartford filed a motion to compel an appraisal. The insured argued that Hartford waived the appraisal by denying liability and failing to timely request the appraisal.
The court determined that Texas courts would hold that Hartford waived its right to an appraisal. The appraisal clause contained no time frame for invoking the procedure. However, when the insured called the adjuster to complain about the limited coverage, it was clear the parties had reached an impasse on the amount of damages caused by the Hurricane. At this point, Hartford was on notice that it had the right to invoke the appraisal clause. Hartford, however, waited for over eleven months to act.
