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Were Older Appraisals Arbitration? One Older Appraisal Clause Clearly Was Not an Arbitration Clause | Property Insurance Coverage Law Blog

Ever get so curious about something that is not so meaningful, but you just have to know the answer to satisfy your curiosity? I have been on a very nerdy quest about older appraisal clauses in property insurance policies because I challenged a commentator to this blog about not simply repeating what others have said about the origin of appraisal found in property insurance policies.

My recent post, The First Standard Fire Policy—Did It Contain an Arbitration Clause Rather Than an Appraisal Clause?, is part of this exercise that only the nerdiest coverage geeks would spend their valuable time studying. If you have read this far into this blog, are you one of us?

If so, you will be happy to learn that we have found a clause that is clearly an appraisal clause rather than an arbitration clause, which was recited in a case where the fire occurred in 1882:

The amount of sound value and of damage to the property may be determined by mutual agreement between the company and the assured; or failing to agree, the same shall then, at the written request of either party, be ascertained by an appraisal of each article of personal property, or by an estimate in detail of a building, by competent and impartial appraisers, one to be selected by each party, and the two so chosen shall first select an umpire to act with them in case of their disagreement; and if the said appraisers fail to agree they shall refer the differences to such umpire; and the award of any two in writing, under oath, shall be binding and conclusive as to the amount of such loss or damage, but shall not decide as to the validity of the contract or any other question except the amount of such loss or damage.1

The court called it an arbitration clause, but it is not. This clause clearly limits the panel to determining only the amount of “loss or damage.”

A 1956 law review article, Appraisals of Loss and Damage Under Insurance Policies,2 was a study of the appraisal clause in the context of courts ruling on them as possible arbitration provisions. The article stated as part of its introduction to appraisal versus arbitration rhetoric:

The appraisal as a mode of settlement of the differences referred to has been likened to common law arbitration in various particulars and differentiated in others. A substantial part of the judicial decisions have involved these comparisons; in others, however, no such comparisons appear. In the latter cases, it is generally assumed that the appraisal or the agreement therefor is an arbitration or arbitration agreement, as the ease may be.

The break-down in the use and usefulness of this mode of settlement of the differences referred to is attributable in considerable part to judicial decisions dealing with revocability of the appraisal provision. Collateral doctrines, such as “waiver,” have been reared in these cases. These doctrines have been woven into a labyrinth of technicalities in which the provision can rarely survive and function. Judicial decisions also have cast shadows over the parties’ right of hearing in the appraisal proceedings. Some recognize the right, but others have limited or denied it.

Modern arbitration statutes have scarcely noticed this mode of settlement. Even when such recognition has been indicated, some judicial decisions have been reluctant to allow it. Availability of rights and remedies of the arbitration statutes is doubtful. In a few jurisdictions statutes strike down these appraisal provisions and invalidate proceedings under them.

That is enough for today’s post on this issue. However, we have uncovered a full appraisal clause from the 18th century provided to us by Bob Norton, which I will be writing about shortly.

I also want to give a shout out to Etienne Font (pictured above) who has been helping with the research into the older appraisal clauses.

Thought For The Day

We are not makers of history. We are made by history.
—Martin Luther King, Jr.
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1 Uhrig v. Williamsburg City Fire Ins. Co., 101 N.Y. 362, 4 N.E. 745 (1886).
2 Wesley A. Sturges and William W. Sturges, Appraisals of Loss and Damage Under Insurance Policies, 11 U. Miami L. Rev. 1 (1956) Available at: https://repository.law.miami.edu/umlr/vol11/iss1/5

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