“Can Causation Be Examined as Part of the Amount of Loss?” DRI For the Defense
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“Can Causation Be Examined as Part of the Amount of Loss?” DRI For the Defense

“A typical first-party property coverage form contains language indicating that in some circumstances where there is a dispute about the insured’s loss, appraisal is appropriate,” Goldberg Segalla’s Jonathan Schapp and Ashlyn M. Capote write in DRI’s For the Defense. “[T]he appraisal clause can only be triggered when the dispute is specifically about ‘the amount of loss,’ as opposed to, for example, whether there is coverage under the policy,” they explain—but, “whether a particular dispute is over ‘the amount of loss’ is often not a simple question.”

In their article, Jonathan and Ashlyn, members of Goldberg Segalla’s Global Insurance Services practice, examine different scenarios and caselaw relevant to this important first-party property coverage question, touching on causation of damages as both inside and outside the scope of appraisal, when appraisal decisions might in full or in part be voided, and recommendations for how appraisers ought to approach appraisal in causation disputes.

“Despite the different approaches that courts have taken, the overall trend is that courts are typically more inclined to allow appraisers latitude to determine causation issues,” they conclude. “It can therefore be expected that more courts will adopt the already majority view that causation questions are appropriate for appraiser determination. … While it may be an insurer’s opinion that an individual case is inappropriate for appraisal, avoiding litigation wherever possible will lead to more favorable results and less hostile relationships with customers than those that often result from litigation.”

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