Appraisal Exists to Establish Quantum of Loss

Appraisal Required to Establish Amount of Loss

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The plaintiff, Shelter Mutual Insurance Company (Shelter), appealed the circuit court of Coles County’s March 28, 2023, oral pronouncement denying its motion for judgment on the pleadings and ordering the parties to proceed forward with the appraisal process as outlined in the at-issue insurance policy, and the circuit court’s written March 30, 2023, order memorializing the same.

In Shelter Mutual Insurance Company v. Tim Morrow and Jodie Morrow, 2023 IL App (5th) 230249-U, No. 5-23-0249, Court of Appeals of Illinois, Fifth District (August 24, 2023) was asked to determine if appraisal could be compelled.


Shelter issued a homeowners insurance policy to the Morrows (the Policy). The Policy was in effect from April 7, 2021, to April 7, 2022. The policy provided:


If you and we fail to agree on the market value, total restoration cost, actual cash value, or amount of loss, as may be required in the applicable policy provision, either party may make written demand for an appraisal. …

The appraisers shall then appraise the loss, stating separately the market value, total restoration cost, actual cash value, or loss to each item as may be required in the applicable policy provision…. 

On December 10, 2021, a hail and windstorm occurred affecting the Morrows’ property. The Morrows submitted a claim to Shelter for damage allegedly sustained because of the storm. Shelter inspected the claimed property damage and determined that the damage added up to less than the Morrows’ deductible of $1000. In response, the Morrows obtained their own report and estimate from a public adjuster, the Accuval Group LLC, dated December 21, 2021. That report indicated that a complete tear-off and replacement of the residence roof and garage roof, as well as removal and replacement of the fencing would be necessary at a total cost of $38,198.15, less the $1000 deductible.

Following this report, Shelter obtained a second assessment, this time from Donan Engineering, dated February 2, 2022. That report concluded that some of the damage claimed was attributed to the storm, but other damage claimed was not. That report found that much of the damage was attributable to installation errors, inadvertent man-made damage, and sealant strip failure. On February 8, 2022, Shelter sent a letter informing the Morrows that it continued to view the loss as not exceeding their deductible. On May 5, 2022, the Morrows submitted a written demand for appraisal pursuant to the appraisal provision in the policy.

Shelter sued for declaratory judgment seeking to deny insurance coverage to the Morrows for the alleged damages resulting from the December 10, 2021, storm. The Morrows answered the complaint and filed counterclaims asserting breach of contract and bad faith, specifically alleging bad faith for Shelter’s refusal to submit to the appraisal process as outlined in the Policy and as previously invoked by the Morrows on May 5, 2022.

The circuit court denied the motion for judgment on the pleadings and ordered the parties to proceed with the appraisal process as previously invoked by the Morrows and as outlined in the Policy.


An appraisal clause is analogous to an arbitration clause. The Court of Appeals held that an order denying a motion to dismiss was tantamount to an order denying arbitration.

Shelter contends that a party’s “right or obligation to engage in the appraisal process is limited to what they agreed to in the policy, and to the nature of the appraisal process itself.” It then argues that an appraisal process is limited to “determining the price of covered damage,” but is not the proper venue for “resolving a dispute about whether covered damage occurred,” or “the extent of that covered damage.”

Shelter’s assessment acknowledged that a tornado touched down approximately 1.8 miles northwest of the Morrows’ property on the date of the storm. The report acknowledged  that “higher wind speeds affected [the Morrows’] property.” Based upon these facts alone, it is evident that the question at issue is not whether a covered loss occurred because a covered loss was found by Shelter’s own adjuster in its report. Therefore, the true dispute of the parties is the amount of that covered loss.

This case involves a determination of the “amount of loss,” which is expressly stated within the appraisal clause as an appropriate issue for determination under that process

The Court of Appeals affirmed the circuit court’s oral pronouncement.


Once the insurer determined that there was a covered loss and the insured presented evidence that the loss exceeded the deductible contrary to the insurer’s position the policy provided a method to resolve the dispute over the amount of loss. There was no basis to deny coverage – once the adjuster determined the existence of a covered loss – if agreement could not be reached appraisal was the appropriate method of resolving the dispute over the quantum of the loss.

(c) 2023 Barry Zalma & ClaimSchool, Inc.

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About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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