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Claims Practices

Appraisal Only Determines Loss

Barry Zalma | April 1, 2012

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The Ohio Court of Appeal was required to resolve a dispute between Westfield Insurance and its insureds over the entry of judgment after an appraisal award was entered. Westfield appealed the trial court's judgment entry awarding plaintiffs Carl and Mona Stuckman $35,956.78, plus pre-judgment statutory interest from April 14, 2008, for the loss they sustained from a fire at their home, which was covered under the terms of their insurance policy with Westfield.

In Stuckman v. Westfield Ins. Co., 2012 Ohio 986 (Ohio App. Dist. Mar. 12, 2012), the Ohio Court of Appeal was asked to eliminate pre-judgment interest and take into consideration prior payments and the deductible amount that was the obligation of the Stuckmans.

Facts of the Case

On April 14, 2008, the Stuckmans suffered damages as a result of a fire at their home in Bucyrus, Ohio. The Stuckmans and Westfield were unable to agree on the amount of loss, and consequently, Westfield demanded an appraisal under the terms of the insurance policy.

On December 2, 2008, the Stuckmans filed a declaratory action in the trial court asking the court to declare the appraisal provision of the insurance contract ambiguous and unenforceable or, in the alternative, for the trial court to appoint an umpire and declare the appropriate procedure for the appraisal. The complaint prayed further for the trial court to declare the Stuckmans' right to recover under other sections of the insurance policy and to award the Stuckmans damages, costs, and pre-judgment interest from April 14, 2008.

On January 30, 2009, Westfield filed its answer setting forth several defenses and requesting an appraisal as provided for in the insurance policy. On June 1, 2009, the trial court held a hearing for the purpose of appointing an umpire as provided for in the insurance policy. Thereafter, by journal entry dated June 10, 2009, the trial court appointed David Dolland to serve as umpire. In relevant part, the trial court's entry further provided that "[t]he manner in which the appraisal is to be conducted is set forth in the subject policy of insurance." The trial court explained this process in its journal entry as follows:

Plaintiff's selected appraiser Patrick Murphy and Defendant Westfield's selected appraiser John Anich will separately set the amount of loss on each of the issues to be determined by appraisal. If the two appraisers agree on the amount of any of the losses at issue to be determined by appraisal, then as to any such agreement, the two appraisers will issue a report accordingly and that will be the amount of any such loss. If the two appraisers fail to agree on the amount of any of the losses at issue to be determined by appraisal, then they will submit their differences to the umpire. A decision agreed by either of two appraisers and the umpire will set the amount of any such loss.

The Appraisal Award

Since the parties' appraisers could not agree on the amount of loss, the umpire issued an appraisal award on January 27, 2010, concurring with the appraisal submitted by Westfield's appraiser, John Anich, for the following:

  1. Dwelling—Replacement cost repairs: $31,845.56 Depreciation:  – $5,102.23 Actual Cash Value Loss: $26,743.23
  2. Contents—Replacement cost to clean: $3,813.45 (Actual cash value loss)
  3. Additional Living Expense: $5,400.00 TOTAL: $35,956.68

Below these calculations appears the following statement: "This appraisal award is made without consideration of the deductible. The signatures of any two of the below three persons constitutes the amount of loss."

On February 3, 2010, the trial court issued judgment in favor of the Stuckmans as follows:

$26,743.33, less any amount previously paid by Westfield, for Dwelling coverage;

$3,813.45, less any amount previously paid by Westfield, for Contents coverage; and

$5,400.00, less the $1,000.00 deposit paid by Westfield to Housing Headquarters that is refundable directly to Plaintiffs, for Additional Living Expense coverage.

If and when Plaintiffs complete repairs to the dwelling, they will be entitled to recover the Depreciation holdback of $5,102.23.

The Post-Judgment Motions and Appeal

On February 26, 2010, the Stuckmans filed a motion for reconsideration of the trial court's judgment entry arguing that the trial court inappropriately deducted sums "previously paid by Westfield" from the appraisal award without any evidence in the record to support these deductions. On March 4, 2010, Westfield filed a motion for leave to oppose the Stuckmans' motion for reconsideration.

The Ohio Court of Appeal overruled the Stuckmans' assignments of error concerning the enforceability of the appraisal provision and the trial court's alleged lack of instruction to the appraisers concerning the appropriate procedure for the appraisal since the trial court clearly followed the terms of the insurance policy.

Prior to the trial court's September 21, 2011, hearing upon remand, Westfield presented evidence of payments it made to the Stuckmans totaling $35,456.78—the total amount of the appraisal award minus the $500 deductible. Despite this evidence, the trial court entered judgment in favor of the Stuckmans for $35,956.78, the total amount of the appraisal award without regard to the $500 policy deductible or Westfield's previous payments, plus statutory interest from April 14, 2008, the date of the fire, thereby doubling the Stuckmans' recovery.

Since the trial court had evidence of Westfield's payments at the September 21, 2011, hearing—evidence the trial court did not have when it entered judgment on February 3, 2010—it should have deducted Westfield's payments from the appraisal award for purposes of its judgment. The trial court also should have subtracted the $500 deductible from the appraisal award, as the Stuckmans conceded on appeal.

The Ohio Court of Appeal returned the case to the trial court to enter judgment after taking into consideration the amounts already paid and the deductible, in essence finding that the Stuckmans had been paid in full on their claim and the appraisal award.


Appraisal is usually the fastest, quickest, and most fair method of determining the amount of loss when the insured and the insurer cannot agree. This case reveals that some people refuse to accept a win and insist on moving for a new trial and taking the case up on appeal rather than accept the award. There is no question that we live in a litigious society. It does seem somewhat ridiculous to litigate to this extent—suit, motions, trial, appointment of appraisers, inability to appoint an umpire, an order for appraisal and court-appointed umpire, appraisal, motions, and two appeals—over a little less than $36,000.

If appraisal is used properly, the two appraisers meet, review the scene, and usually agree on the amount of loss. When they can't agree, they present their differences to the umpire (chosen by the two appraisers), who resolves the dispute. In such a situation, both the insurer and the insured can accept the award and both go home disappointed.

The lesson to be learned from this case is that a system designed to help resolve disputes about the amount of loss quickly and fairly can be abused to the point where the expense of appraisal far exceeds its value. It is necessary for insurers to avoid this type of problem by hiring competent and experienced claims personnel who can "adjust" a claim with an insured to their satisfaction. The need for appraisal usually arises because of the incompetence or lack of experience of the claims staff or the greed of the insured who insists on considering the claim an adversary proceeding. Many problems like this case can be resolved by a staff of competent and experienced claims handlers.

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