In California, lacking the 100-day deadline to problem an appraisal award beneath the state’s arbitration-style appraisal regulation can immediately finish an insurance coverage dispute, irrespective of how robust the declare. A current California post-appraisal ruling in Bansal v. Nationwide Mutual Insurance coverage Firm 1 presents an vital reminder concerning the penalties of appraisal and the strict procedural guidelines that govern it in California. Earlier this 12 months, I made the next comment in Don’t Just like the Appraisal Award? Right here’s Why That’s Not Sufficient to Keep away from Its Finality, which is relevant to this case:
The appraisal course of shouldn’t be a trial run or a preliminary negotiation. It’s normally the top of the highway. Those that enter it should accomplish that with seriousness, understanding that the result will seemingly be closing and enforceable.
The California insurance coverage dispute arose from a July 2021 water leak within the Bansals’ house. After preliminary funds, disagreement over the scope and value of repairs led to a contractual appraisal. The appraisal panel awarded $165,000 for alternative price, which Nationwide paid in full. The insureds then sought further quantities for transferring bills, momentary housing, meals prices, truthful rental worth, and appraisal charges. Nationwide moved for abstract judgment, contending it had paid all coated quantities and that the appraisal award barred any additional restoration for repair-related prices.
Nationwide’s place was that the appraisal award encompassed all building-related bills beneath Protection A, together with transferring and pack-out prices needed to finish the repairs. It additionally argued that further residing expense claims have been both time-barred beneath the coverage’s 24-month restrict or unsupported by correct documentation. The momentary housing declare concerned Airbnb stays greater than two years after the date of loss and after the award’s five-month interval of restoration, whereas the meals expense declare lacked proof of the insureds’ regular pre-loss prices, making it inconceivable to calculate the required improve coated beneath the coverage.
As for truthful rental worth, Nationwide pointed on the market was no proof the property was rented or held for rental on the time of loss. It additionally asserted that and not using a breach of contract, there might be no dangerous religion, and that the real dispute doctrine additional insulated it from legal responsibility.
The policyholders countered that transferring prices weren’t a part of the appraisal as a result of the panel was solely licensed to find out restore prices to the dwelling, not further residing bills. They argued that late documentation of momentary housing and meals prices didn’t routinely defeat protection, as California regulation requires the insurer to indicate substantial prejudice from late discover. They maintained that they by no means completely relocated to their second house and solely rented the Airbnb to supervise repairs, and that they offered an affordable methodology to estimate meals price will increase when precise pre-loss receipts have been unavailable.
In addition they claimed entitlement to truthful rental worth based mostly on their intent to lease the property as soon as repairs have been full. Lastly, they contended that delays, repeated requests for paperwork, and an unduly slim studying of the coverage amounted to dangerous religion and justified punitive damages.
The courtroom sided completely with Nationwide. It concluded that beneath California regulation, which treats appraisal as a type of contractual arbitration, the award was closing and binding absent a well timed petition to vacate or modify inside 100 days, as required by California regulation. As a result of the insureds had demanded that the panel appraise all the loss to the dwelling, and transferring prices have been essential to facilitate repairs, these bills have been a part of the award.
The momentary housing declare was denied by the courtroom as a result of the prices have been incurred exterior the coverage’s deadlines and with out well timed documentation. The meals expense declare failed for lack of proof of the rise above regular prices, and a number of the claimed bills have been unrelated to the loss. Truthful rental worth was denied as a result of the property was neither rented nor held for rental on the time of loss. With no breach of contract, the dangerous religion and punitive injury claims additionally failed.
This case has a number of classes for policyholders and public adjusters. In California, appraisal is ruled by statutory arbitration guidelines, not the widespread regulation, and the statutory deadlines for difficult an award are unforgiving. As soon as an award is issued, any repair-related price not expressly excluded is prone to be deemed resolved, so events have to be clear about what’s included within the appraisal demand.
Extra residing expense claims require each immediate documentation and proof of the rise over regular prices. Coverage deadlines, such because the 24-month cap on ALE, are sometimes strictly enforced, and it’s harder to acquire them as consequential injury in a foul religion lawsuit. As a result of some jurisdictions won’t entertain dangerous religion damages if there isn’t a breach of contract based mostly on the insurer’s well timed cost of an appraisal award, preserving the suitable to assert advantages within the contract motion or appraisal is crucial.
From a sensible viewpoint, the insurer actually paid far too little on its preliminary cost in relation to the ultimate appraisal award. Nevertheless, the general public adjuster’s demand was equally too excessive. The appraisal panel almost cut up the 2 views within the center. This level, together with the shortage of cooperation and documentation not offered by the policyholders, clearly impacted the courtroom’s view of the case.
Thought For The Day
“California is a backyard of Eden, a paradise to reside in or see; however consider it or not, you received’t discover it so scorching in the event you ain’t bought the do re mi.”
—Woody Guthrie
1 Bansal v. Nationwide Mut. Ins. Co., No 23-cv-05527 (N.D. Cal. Aug. 10, 2025).
