Ohio Supreme Court Finds that Hidden Damage Discovered After Appraisal Was Completed and Repairs Commenced May Still Be Recoverable

The plaintiff was insured by the defendant insurance company for property damage to its building, which sustained wind damage in a storm on February 24, 2019. The defendant had an appraiser inspect the damage and issued a report and a check for $3,192.67 for repairs to 42 shingles and some interior locker room damage. The plaintiff then invoked the appraisal provision of the policy, and each party hired their own appraiser. After the appraisers inspected the property, they agreed that the damages were $313,271.98, and no umpire was needed or appointed. The defendant paid this amount less the $900 deductible.

In October 2020, the plaintiff sought recovery of an additional $206,663.09 for damage not included in the Binding Appraisal Award. The plaintiff asserted that the damages were not discoverable until the repairs were commenced. The defendant rejected this claim, but made a payment of $39,089.52, for recoverable depreciation, and closed its file.

The plaintiff sued, arguing that the damages were not included in the appraisal because they could not be discovered until after the repairs commenced. The plaintiff also alleged that it would not have needed to go to appraisal if the insurer’s initial estimate of damages had not been so unrealistically low. They further alleged bad faith.

The defendant counterclaimed and then moved for judgment on the pleadings, arguing that the Binding Appraisal Award barred any subsequent claim. The trial court agreed, dismissing the claim for failure to state a claim upon which relief can be granted.

The plaintiff appealed. The Court of Appeals reversed, finding that the plaintiff’s claim for additional loss, that could not have been known to either party’s appraiser at the time of the initial appraisal, was not barred and could proceed at this early stage of the litigation.

This opinion contains a good discussion of the application of the appraisal provision in a property insurance policy, a topic which is seldom the subject of appellate opinions.