The latest federal choice in Nashville Communications v. Auto-House owners Insurance coverage Firm 1 gives a reminder of how appraisal is meant to work in Tennessee and why insurers generally overplay their hand when making an attempt to recast a easy amount-of-loss dispute into an alleged causation or protection battle. The case turned on a slender strip of parapet wall that the insurer admitted was broken by wind. From that small concession grew an enormous authorized struggle about whether or not the appraisers had been allowed to conclude that totally repairing that parapet injury required changing the complete roof. The policyholder stated sure. The insurance coverage firm stated 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 injury. The umpire and the policyholder’s appraiser concluded that making an attempt to surgically restore the parapet would create a domino impact of collateral injury 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 willpower below Tennessee regulation. It says nothing about whether or not every other portion of the roof was broken by wind.
Auto-House owners went in a really completely different path. Auto-House owners argued that the umpire made a prohibited causation discovering when he referenced moisture passing by way of the roof and the problem of repairing solely the parapet part. Based on the insurer, these statements amounted to an implicit conclusion that the parapet injury brought about broader roof issues, one thing appraisers haven’t any authority to resolve in Tennessee. Auto-House owners additionally harassed the roof’s age and deterioration, contending that these circumstances, quite than wind, brought about 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 quite than the slender repair-method evaluation the policyholder claimed it was.
Decide Trauger’s opinion reads like a direct software of the rules 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 injury was the small parapet part. From there, they did exactly what appraisers are speculated to do. They determined the right way to restore the injury that had been conceded.
Decide Trauger emphasised that Tennessee regulation permits appraisers to find out the scope, means, and strategies of restore and to conclude that repairing a broken element requires changing a complete built-in system. She even cited instances recognizing that repairing one a part of a roof might 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 establish 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 in the end unsuccessful, weren’t so unreasonable as to represent unhealthy religion below Tennessee’s demanding statutory normal. In that respect, her ruling was measured. The appraisal award stands, however the mere act of difficult it doesn’t robotically create insurer unhealthy religion.
What stands out on this case is the readability the courtroom delivered to the boundary line that always confuses attorneys, adjusters, and insurers. Appraisers can’t resolve what brought about the injury, however they’ll resolve the right way to restore the injury that the insurer already acknowledges. When an insurer disputes the reason for extra claimed injury, that dispute belongs in courtroom, not appraisal. However as soon as the insurer concedes some portion of storm injury, appraisers get to find out what it takes to repair it utterly and correctly. That’s exactly what occurred right here.
For these fascinated with Tennessee regulation 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 Courtroom 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 pondering we had been at after 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).