The Illinois Appellate Court held that issues of causation can be part of an appraisal process. Xaing Zhoa v. State Farm Fire & Cas., Co., 2025 Ill App. LEXIS 903 (Ill. App. Ct. May 12, 2025).
The insured had a homeowners policy with State Farm. A hailstorm damaged the insured's home. State Farm investigated and paid $12,677.94 as an actual value payment. The payment included replacement of gutters, downspouts, and aluminium wraps on certain window frames and trim.
The insured felt more was owed and received a second estimate from Encompass Builders who determined that the hail damage was extensive enough to require the replacement of all of the windows in the dwelling, at an estimated cost of $133,817.82. The second estimate also claimed that the scope of the work was extensive enough to require a general contractor and to trigger the inclusion of both overhead and profit in the estimate.
The insured invoked her right to an appraisal pursuant to the policy. She identified the dispute as "the scope of the damages and the damage repairs" needed to restore the windows of the dwelling. She listed her appraiser and asked State Farm to have its appraiser contact the insured's appraiser to select an umpire and schedule the appraisal.
State Farm refused to appoint an appraiser, stating that it viewed the differences in estimates to be based on a dispute over policy coverage, not the amount of loss.
The insured filed suit seeking a declaratory judgment that would compel the parties to proceed with appraisal under the terms of the policy. State Farm's answer claimed that any damage to the windows was caused by conditions not covered by the policy, such as natural wear and tear, improper installation, and age-related mechanical breakdown. As such, there was no accidental direct physical loss to the windows that would warrant full replacement under the terms of the policy.
The trail court granted judgment on the pleadings to the insured. The court held that State Farm had acknowledged the existence of a covered loss when it prepared an estimate and paid the insured. This meant that the dispute was one involving the "amount of loss," not the scope of coverage.
The appellate court affirmed. Coverage issues included the determination of who was insured, the type of risk insured against, and whether the policy existed. There was little doubt that the windows of the home were "covered" under the policy. There was a dispute as to whether or not the windows were damaged by the storm but that was not the same as a dispute as to whether the windows were covered by the policy at all. It was an issue of loss and appraisal was ideally suited to resolve disputes over loss.
The trial court could compel compliance with the appraisal clause of the policy to resolve disputes relating to the "amount of loss." While questions of law and coverage were decided by the court, resolving some questions of causation were necessarily included in the appraisal process. The trail court correctly granted the insured's motion for judgment on the pleadings and correctly compelled appraisal.
