“An appraisal is for damages caused by a specific occurrence, not every repair a home might need. When asked to assess hail damage, appraisers look only at damage caused by hail; they do not consider leaky faucets or remodeling the kitchen.” State Farm Lloyds v. Johnson, 290 S.W.3d 886, 888, 893 (Tex. 2009).
When Different Causes Are Alleged for a Single Injury
The Wells v. American States Preferred Insurance Co. example:
Policyholder files a claim for foundation damage. Policyholder believes the foundation damage is due to plumbing leaks (covered). Insurer believes the foundation damage is the result of settling (excluded peril). The appraisers find $0 damage due to plumbing leaks and $22,875.94 due to settling. The Award is set aside.
Holding: Appraiser could decide the cost to repair the foundation damage but not what caused it.
How to Analyze the Issue
Single Injury to Property: Foundation damage
Amount of Loss Issue: Cost to repair or replace foundation damage
Coverage issue: What caused the foundation damage?
Appraisers can decide cost of repair (damages) but not what caused the foundation damage (coverage question for the lawyers and court). Also note: When an indivisible injury to property may have several causes, appraisers can assess the amount of damage and leave causation up to the courts. Perhaps the foundation damage was a combination both plumbing leaks (covered) and settling (excluded). Appraise the cost of repair, leave coverage up to the courts.
4 Classic Examples of the Single Injury Rule:
1. Old Hail versus New Hail
Single Injury to Property: Hail damage
Amount of Loss Issue: Cost to repair or replace hail damage
Coverage Issue: Old Hail (no coverage) vs New Hail (covered)
Appraisers can decide cost to repair the hail damage but not which storm caused the hail damage. This is a coverage question for the lawyers and court.
2. Interior Water Damage
Single Injury to Property: Water damage
Amount of Loss Issue: Cost to repair or replace water damage
Coverage Issues: Storm created opening, old water damage, etc
Appraiser can decide cost to repair the water damage but not what caused the water damage (storm created opening, previous leaks, etc).
Why not further limit or qualify ‘specific occurrence’ (e.g. hail) to a specific storm event, time period or new vs. old hail damage? In addressing this issue, the court approved the holding in Wells v. American States Preferred Insurance Co., 919 S.W.2d 679, 685–686 (Tex.App. — Dallas 1996, writ denied) to demonstrate the effect of further limiting or qualifying the specific occurrence to be appraised. See Id. at 892.
In Wells, the appraisers were asked to determine the amount of foundation damage. Note that foundation damage is a specific occurrence. Rather than look at the cost to repair the foundation damage and come up with an amount of loss, the appraisers divided the foundation damage into subcategories — foundation damage caused by water from plumbing leaks (a covered peril) and foundation damage from settling (an excluded peril). The appraisers determined all the foundation damage was caused by settling and none of the foundation damage was caused by plumbing leaks. The Dallas Court of Appeals set aside the appraisal, holding appraisers could decide the amount of foundation damage but not the root cause of the damage (broken pipe or foundation settling). The Texas Supreme Court cautioned that ‘[a]ppraisers can decide the cost of repairs in this context, but if they can also decide causation there would be no liability questions left for the courts.” Id.
Appraising water damage is another example where appraisers often struggle. Not unlike the foundation damage discussed above, appraisers simply determine the cost to repair or replace the water damage at issue. Whether the water damage was caused by a storm-created opening or wear and tear, etc is not an issue the panel needs to address as these are coverage issues.
Disclaimer
This article is for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this article or any of the e-mail links contained within the site do not create an attorney-client relationship between Thomas W. Hamrick and the user or browser. The opinions expressed in this article are the opinions of the individual author and may not reflect the opinions of other lawyers.
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