Minnesota Court of Appeals Weighs in on Appraisals

December 19, 2024

On December 16, 2024, the Minnesota Court of Appeals issued a published decision in Ariel, Inc. v. State Farm Fire and Cas. Co., No. A24-0604 (Minn. App. Dec. 16, 2024), opining on two appraisal issues:

First, the court held that if an insured commences suit within the two-year time limit after the date of loss, the insured can demand an appraisal after the two-year time limit has expired. On the flip side, if an insured does not either commence suit or demand an appraisal within two-years from the date of loss, the insured cannot compel an appraisal or commence suit after the two years. (The two-year time limit in Minn. Stat. § 65A.01, subd. 3, applies to fire claims. For fire claims, the language of the insurance policy may not make the time limit less than two years but may extend it beyond two years. For hail claims, the time limit to commence suit must be at least one year, Minn. Stat. § 65A.26, but the policy language may extend the time limit beyond one year.)

Second, the court also reaffirmed that “the right to demand an appraisal is conditional and disagreement between the parties is a prerequisite to making a demand for an appraisal.” The court considered the evidence provided by Ariel and concluded that it was sufficient to create a dispute between the parties. In so holding, the court of appeals reversed the district court’s determination that the evidence provided by Ariel was not sufficient to create a dispute between the parties.

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Appraisal law in Minnesota is nuanced. The members of Arthur Chapman’s Insurance Coverage Group are ready to walk you through these emerging issues.