Texas Wind and Hail Damage Claims: New Versus Old Hail/Wind Damage. A Guide to Appraisal

“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).

Analyzing the quote above, the issue becomes what is a ‘specific occurrence?’ “When asked to assess hail damage, appraisers look only to damage caused by hail.” Id. Damage caused by ‘hail’ (in general) is a specific occurrence. The court however does not endorse limiting the appraisal to damage caused by ‘hail’ that occurred during a specific time frame (for example during the policy period, or during a specific year or distinguishing between new and old hail damage). 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 water damage. Note that water damage is a specific occurrence (damage caused by water). Rather than look at the damage caused by water and come up with an amount of loss, the appraisers divided the water damage into subcategories — damage caused by water from plumbing leaks (a covered peril) and damage caused by water from settling (an excluded peril). The appraisers determined all the water damage was caused by settling and none of the water damage was caused by plumbing leaks. The Dallas Court of Appeals set aside the appraisal, holding appraisers could decide the amount of damage (damage caused by water) but not the root cause of the water (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. Note that determining cost of repairs to damage caused by water is something appraisers may do — but going the extra step and determining the root cause of the water (e.g. pipe leak or foundation) is a liability issue (coverage issue under the policy) and should the appraisers step over this line the award will be set aside.

PRACTICE POINTER

How would limiting appraisal to hail damage that resulted from the August 2016 hail storm leave no liability question for the courts?

Assuming there is hail damage from multiple storms, what use is the appraisal award?

Is it useful to have a detailed (line item) estimate to support the award?

Whose responsibility is it to distinguish between old and new hail damage?

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