In Johnson v. State Farm Lloyds, No. 05-05-00640-CV, 2006 WL 3042104 (Tex. App.-Dallas Oct. 27, 2006), a Texas appellate court ruled that a dispute between an insured and an insurer involved the amount of loss, and thus the appraisal clause should be applied.

 

Becky Ann Johnson's roof suffered hail damage. Her homeowners insurer, State Farm Lloyds, said only the ridgeline was damaged, the amount to repair was less than Johnson's deductible, and declined to pay.

 

Johnson claimed the whole roof needed to be repaired and submitted an estimate for $6,400. She also demanded that State Farm Lloyds submit to the appraisal process outlined in the policy, but State Farm Lloyds declined, stating that the “disagreement about the extent of the hail damage was a coverage issue that could not be decided by appraisal.”

 

Johnson argued that the dispute concerned the amount of loss due to hail damage, not whether the hail damage was covered. State Farm Lloyds countered that the issue was one of causation—did the hail damage only the ridgeline or the entire roof? Amount of loss, State Farm Lloyds said, is not the same as extent of loss, which it argued the dispute involved.

 

The court said that the dispute was over the amount of loss. Because the parties agreed that hail damage was covered, the court reasoned, the dispute was over the amount of coverage for the loss, which was governed by the appraisal clause.