Events continuously battle over whether or not an appraisal is an arbitration after an appraisal award is entered. I just lately famous that the Rhode Island Supreme Court docket discovered that value determinations operate as arbitrations in “Is It Appraisal, or Is It Arbitration? Can Appraisal be Appraisal and Arbitration on the Identical Time?” A Virginia courtroom was just lately confronted with the identical state of affairs and located that value determinations will not be arbitrations.
The case arose after Ephesus Richmond Seventh-Day Adventist Church filed a declare for wind and hail injury underneath its insurance coverage coverage with Church Mutual. The insurer disputed a lot of the claimed injury and issued solely a partial fee. Pursuant to the coverage, the events initiated an appraisal to find out the quantity of loss. All sides chosen an appraiser, and an umpire was appointed. The umpire in the end agreed with the church’s appraiser, leading to an award far exceeding Church Mutual’s unique estimate. Unhappy with this final result, the insurer petitioned the circuit courtroom to switch the appraisal award underneath the VUAA, claiming it must be handled as an arbitration award topic to judicial evaluation.
The circuit trial courtroom rejected Church Mutual’s argument, ruling that it lacked jurisdiction as a result of the appraisal course of was not arbitration inside the that means of the VUAA. The Court docket of Appeals of Virginia affirmed that ruling. 1 The appellate courtroom emphasised that the insurance coverage contract used the time period “appraisal” within the related provision and included “arbitration” solely in a separate part addressing disputes over protection prices. This demonstrated that the events knew the way to embody arbitration once they meant to take action and intentionally selected not to take action within the appraisal context. The courtroom reasoned that whereas each processes contain impartial third events, their authorized significance and procedural functions are distinct. Arbitration sometimes resolves broader disputes, typically encompassing legal responsibility and authorized questions, whereas appraisal is confined to figuring out the worth of a loss. The language of the courtroom is useful in understanding this reasoning:
We maintain, based mostly on our de novo evaluation, that the events’ contract fails to replicate an intention to categorise the appraisal course of adopted on this case as a type of arbitration underneath the VUAA…The insurance coverage contract consists of specific references to the arbitration of disputes between the insurer and the insured in a provision aside from the one setting out the appraisal course of…That utilization addresses Church Mutual’s settlement to ‘pay ‘protection prices’[ ] incurred by any insured[ ] that outcome from a ‘go well with’ to which th[e] insurance coverage applies.’ …The coverage expressly gives for ‘arbitration’ within the occasion that the insurer and the insured ‘can’t attain an settlement regarding any of the phrases of th[at] Protection Kind’—the shape addressing fee of protection prices….The phrase ‘arbitration,’ in contrast, doesn’t seem within the contract provision masking appraisal awards, the precise provision that varieties the idea of this go well with… In consequence, the terminology within the insurance coverage contract itself resolves the matter earlier than the Court docket. The contract displays that the events agreed to make use of arbitration because the means for resolving disputes over sure sorts of protection prices. They used an entirely completely different time period—appraisal—within the portion of the insurance coverage contract at problem right here. Church Mutual, due to this fact, has not met its burden of proving that the appraisal award qualifies as an arbitration award underneath the VUAA. As a consequence of this distinction in terminology, the insurance coverage contract doesn’t set up that the events reached an settlement to categorise the appraisal course of as an arbitration for functions of Virginia legislation.
The appellate courtroom additionally famous that the dictionary definitions of the phrases supported its interpretation. Arbitration refers to a extra formal dispute decision course of that substitutes for courtroom adjudication, whereas appraisal includes figuring out worth with out resolving broader authorized controversies. As a result of Church Mutual didn’t show that the events meant for the appraisal to operate as an arbitration, it couldn’t use the VUAA to hunt judicial evaluation of the result.
Within the Rhode Island appraisal weblog put up, I famous the next, which must be repeated:
For these concerned in insurance coverage value determinations, this ruling serves as a reminder that the authorized framework governing value determinations varies broadly throughout the USA. Policyholders, insurers, and appraisal professionals should concentrate on how their state treats value determinations and alter accordingly. In states like Rhode Island, events ought to count on that appraisal choices can be reviewed underneath arbitration guidelines. The principles relating to the eligibility to be a part of an appraisal panel are typically extra stringent relating to arbitration and must be fastidiously reviewed earlier than choosing appraisers or umpires.
Appraisal guidelines are consistently altering, and people concerned within the appraisal course of should sustain with adjustments from state to state.
Thought For The Day
“After I come to Virginia, I really feel I’m strolling on the pages of historical past.”
—Eleanor Roosevelt
1 Church Mut. Ins. Co. v. Ephesus Richmond Seventh-Day Adventist Church, 84 Va.App. 371, 914 S.E.2nd 184 (2025).
