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Court Orders Insured to Participate in Statutory Appraisal Process

Kenney v Johnson Inc., 2020 NSSC 196

This case arises from a housefire that occurred in November of 2017. The home belonged to Ms. Bernice Kenney and was insured by Unifund Assurance Company.

After the fire, Ms. Kenney made a claim to Unifund under the policy.  The parties settled the claims for the contents of the house and Ms. Kenney’s additional living expenses resulting from the fire.  In addition, Unifund paid Ms. Kenney the actual cash value of the destroyed house in the amount of approximately $366,000.00.  However, the policy contained a provision providing coverage for “Guaranteed Replacement Cost”, and the parties were not able to agree on the replacement cost.

Each party retained the services of a contractor to provide them with a replacement cost estimate.  Ms. Kenney’s contractor and Unifund’s contractor provided estimates that differed by approximately $400,000.00.  Because of the large discrepancy, Ms. Kenney’s counsel requested information and documents related to Unifund’s estimate.

Unifund did not disclose the requested documents, and instead notified Ms. Kenney that it was invoking the statutory appraisal process under the Insurance Act to determine the replacement cost.  Pursuant to the statutory process, each party selects an appraiser and the two appraisers then select an umpire to adjudicate disagreements.

Counsel for the parties exchanged several emails debating the merits and entitlement to invoke the statutory process.  Unifund then applied to the Court for an order requiring  Ms. Kenney to participate in the statutory process.

The Court granted Unifund’s motion.  The Court stated that the statutory appraisal process is advantageous to both the insured and the insurer.  It is a quick and efficient method for resolving disputes related to the value of insured property.  Although some disagreements between the parties may relate to legal matters (eg. building codes or by-laws), the appraisers and umpire can identify those issues and set them aside for Court. This approach minimizes trial time to those issues that are legal in nature and as such is more efficient and cost effective to both the parties and to the administration of justice. However, the appraisal process does not operate as a stay of the legal proceedings and thus the parties should continue to deal with any litigation issues unrelated to the appraisal.

You can read Kenney v Johnson Inc., 2020 NSSC 196 in its entirety here.

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