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Contractual prerequisites contained within an insurance policy must be performed prior to invoking appraisal, an appellate court in North Carolina held.
In Hailey v. Auto-Owners Ins. Co., No. COA06-187, 2007 WL 505765 (N.C. Ct. App. Feb. 20, 2007), Hailey owned numerous commercial properties that were insured with Auto-Owners Insurance. Hailey filed claims and was paid, but later found that the amount of the claims were insufficient to cover his losses.
Hailey sought appraisal under the appraisal agreements contained within the insurance policies in trial court. Auto-Owners Insurance argued that Hailey wasn't entitled to appraisal. In response, Hailey sought declaration of the parties' rights. The trial court granted Hailey's motion to dismiss after each party had presented its evidence. Auto-Owners Insurance appealed.
This Court determined that it was not sufficient for Hailey to unilaterally disagree as to the amount of loss paid. The insurance policies for the numerous properties contained language which allowed each party to demand, in writing, an appraisal of the loss if there were any disagreement as to the amount of loss between the parties. "In other words, by the terms of the contract, it was contemplated that the parties would engage in some meaningful exchange of information sufficient for each party to arrive at a conclusion before a disagreement could exist."
Documentation supported the fact that the parties agreed as to the amount of loss. If Hailey disagreed, it was required to contact Auto-Owners Insurance prior to invoking appraisal, even if the language of the appraisal clause did not refer to "post-loss duties." See U.S. Fidelity & Guar. Co. v. Romay, 744 So.2d 467 (Fla. Ct. App.3d 1999).
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