In California, lacking the 100-day deadline to problem an appraisal award below the state’s arbitration-style appraisal regulation can immediately finish an insurance coverage dispute, regardless of how robust the declare. A latest California post-appraisal ruling in Bansal v. Nationwide Mutual Insurance coverage Firm 1 provides an vital reminder in regards to 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 just isn’t a trial run or a preliminary negotiation. It’s normally the tip of the highway. Those that enter it should accomplish that with seriousness, understanding that the end result will doubtless be ultimate and enforceable.
The California insurance coverage dispute arose from a July 2021 water leak within the Bansals’ residence. After preliminary funds, disagreement over the scope and price 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 extra quantities for transferring bills, non permanent housing, meals prices, truthful rental worth, and appraisal charges. Nationwide moved for abstract judgment, contending it had paid all lined 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 below Protection A, together with transferring and pack-out prices vital to finish the repairs. It additionally argued that extra dwelling expense claims had been both time-barred below the coverage’s 24-month restrict or unsupported by correct documentation. The non permanent 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 not possible to calculate the required enhance lined below 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 with out a breach of contract, there might be no unhealthy 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 approved to find out restore prices to the dwelling, not extra dwelling bills. They argued that late documentation of non permanent housing and meals prices didn’t robotically 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 residence and solely rented the Airbnb to supervise repairs, and that they offered an inexpensive methodology to estimate meals price will increase when precise pre-loss receipts had been unavailable.
In addition they claimed entitlement to truthful rental worth based mostly on their intent to lease the property as soon as repairs had been full. Lastly, they contended that delays, repeated requests for paperwork, and an unduly slim studying of the coverage amounted to unhealthy religion and justified punitive damages.
The courtroom sided completely with Nationwide. It concluded that below California regulation, which treats appraisal as a type of contractual arbitration, the award was ultimate 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 the complete loss to the dwelling, and transferring prices had been essential to facilitate repairs, these bills had been a part of the award.
The non permanent housing declare was denied by the courtroom as a result of the prices had been incurred outdoors the coverage’s closing dates and with out well timed documentation. The meals expense declare failed for lack of proof of the rise above regular prices, and among the claimed bills had been unrelated to the loss. Honest 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 unhealthy religion and punitive harm 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 frequent 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 should be clear about what’s included within the appraisal demand.
Further dwelling expense claims require each immediate documentation and proof of the rise over regular prices. Coverage closing dates, such because the 24-month cap on ALE, are sometimes strictly enforced, and it’s harder to acquire them as consequential harm in a foul religion lawsuit. As a result of some jurisdictions won’t entertain unhealthy religion damages if there isn’t a breach of contract based mostly on the insurer’s well timed fee of an appraisal award, preserving the precise to say advantages within the contract motion or appraisal is important.
From a sensible perspective, the insurer definitely paid far too little on its preliminary fee in relation to the ultimate appraisal award. Nonetheless, the general public adjuster’s demand was equally too excessive. The appraisal panel almost break 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 dwell in or see; however consider it or not, you gained’t discover it so scorching in case you ain’t obtained the do re mi.”
—Woody Guthrie
1 Bansal v. Nationwide Mut. Ins. Co., No 23-cv-05527 (N.D. Cal. Aug. 10, 2025).
