Appraisal and Disposal of Damaged Contents

August 15, 2016

A fire loss lead to substantial damage to the insured's structure and contents. The contents were disposed of after the insurer provided their spreadsheet to the insured. The insured then invoked appraisal because they disagree with item prices and overall settlement offered from the insurer on the contents. Can the insurer deny the appraisal because the items were disposed of? Please note, the insured possesses pictures of the damaged property, and there is no difference over scope, only the prices of each item.

New Jersey Subscriber

One of the duties after a loss is to show the damaged property as often as the carrier reasonably requires. The policy clearly states that failure to comply with duties can be cause for denial of a claim if the failure to follow the duties is prejudicial to the carrier. However, an appraisal is not dependent on the duties; the appraisal is an option if the insured and the carrier disagree on the amount of loss. The exact wording is "If you and we fail to agree on the amount of loss, either may demand an appraisal of the loss" (emphasis added). Nothing in the policy states that the carrier can refuse an appraisal for anything—if either party demands it, the other party must comply. It is an issue of fact as to whether the lack of the actual damaged property prejudices the carrier; the appraisers or umpire should speak to that.