The latest federal choice in Nashville Communications v. Auto-House owners Insurance coverage Firm 1 presents a reminder of how appraisal is meant to work in Tennessee and why insurers generally overplay their hand when attempting to recast a easy amount-of-loss dispute into an alleged causation or protection battle. The case turned on a slim strip of parapet wall that the insurer admitted was broken by wind. From that small concession grew an enormous authorized battle about whether or not the appraisers have been allowed to conclude that absolutely repairing that parapet harm required changing your entire roof. The policyholder mentioned sure. The insurance coverage firm mentioned completely not.
The policyholder’s argument was simple. Auto-House owners conceded wind broken a discrete portion of the parapet membrane. As soon as that concession was made, the appraisers’ job was merely to find out the quantity of loss arising from that admitted harm. The umpire and the policyholder’s appraiser concluded that attempting to surgically restore the parapet would create a domino impact of collateral harm and fail to return the constructing to its pre-loss situation. They defined that the moisture detected across the parapet space, mixed with the deteriorated situation of the roofing system, made spot-repair impractical and ineffective. Of their view, the one viable restore methodology was full substitute. That’s an amount-of-loss dedication below Tennessee legislation. It says nothing about whether or not some other portion of the roof was broken by wind.
Auto-House owners went in a really totally different path. Auto-House owners argued that the umpire made a prohibited causation discovering when he referenced moisture passing by the roof and the problem of repairing solely the parapet part. In line with the insurer, these statements amounted to an implicit conclusion that the parapet harm induced broader roof issues, one thing appraisers haven’t any authority to determine in Tennessee. Auto-House owners additionally pressured the roof’s age and deterioration, contending that these situations, relatively than wind, induced the leaks and that the umpire improperly swept all of this into the award. The insurer framed the appraisal panel’s choice as an unauthorized growth of protection relatively than the slim repair-method evaluation the policyholder claimed it was.
Decide Trauger’s opinion reads like a direct software of the ideas Tennessee courts have lengthy endorsed. She held that the appraisers didn’t step over the causation line. As a substitute, they accepted Auto-House owners’ personal framing of the loss: the one storm harm was the small parapet part. From there, they did exactly what appraisers are imagined to do. They determined the best way to restore the harm that had been conceded.
Decide Trauger emphasised that Tennessee legislation permits appraisers to find out the scope, means, and strategies of restore and to conclude that repairing a broken part requires changing a complete built-in system. She even cited circumstances recognizing that repairing one a part of a roof could essentially require changing the entire thing. The umpire’s declaration and testimony sealed the purpose. He expressly said he made no causation or protection determinations, and Auto-House owners’ company consultant admitted he couldn’t determine any such discovering within the award.
The courtroom enforced the appraisal award as a result of the insurer failed to point out the panel exceeded its authority. On the identical time, Decide Trauger denied the policyholder’s bad-faith declare, concluding that Auto-House owners’ arguments, although finally unsuccessful, weren’t so unreasonable as to represent dangerous religion below Tennessee’s demanding statutory commonplace. In that respect, her ruling was measured. The appraisal award stands, however the mere act of difficult it doesn’t robotically create insurer dangerous religion.
What stands out on this case is the readability the courtroom dropped at the boundary line that always confuses legal professionals, adjusters, and insurers. Appraisers can not determine what induced the harm, however they will determine the best way to restore the harm that the insurer already acknowledges. When an insurer disputes the reason for further claimed harm, that dispute belongs in courtroom, not appraisal. However as soon as the insurer concedes some portion of storm harm, appraisers get to find out what it takes to repair it utterly and correctly. That’s exactly what occurred right here.
For these excited by Tennessee legislation on appraisal, I counsel studying Causation in Appraisal—What’s the Causation Rule in Tennessee Value determinations. Brandon McWherter blogged about this case in Federal Court docket Enforces Appraisal Award for Full Roof Alternative in Vital Win for Tennessee Policyholders.
Thought For The Day
“The numerous issues we face can’t be solved on the identical degree of considering we have been at once we created them.”
— Albert Einstein
1 Nashville Communications v. Auto-House owners Ins. Co., No. 3:24-cv-01020 (M.D. Tenn. Nov. 13, 2025).
