Jeff and Tania Kacha own a custom home, which was completed in 2002. In October 2003, the house and its contents were severely damaged by heat and smoke in a wildfire. Homes on three sides of the Kacha home burned to the ground.

Allstate Insurance Co. held a homeowner’s insurance policy on the Kacha home. After the fire, Allstate valued the cost to clean up the residence and its contents at $25,800, which Allstate promptly paid to the Kachas.

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However, Jeff Kacha refused to cash the check because, he argued, the damage was much more extensive. He hired Kevin Dawson, a licensed public adjuster, to present Kacha’s claim to Allstate.

Unable to reach an agreement on the loss amount, which Kacha argued was $639,689, in 2004 he demanded an appraisal, as provided in the Allstate homeowner’s policy. Allstate resisted, claiming the appraisal was premature.

Kacha sued Allstate, asking the court to appoint an appraisal panel to evaluate the loss. After investigation and determining loss coverages under the policy, the appraiser panel awarded Kacha $163,792. But he refused to cash Allstate’s check for that amount.

He then filed a petition with the court to vacate the appraisal award because the appraisers also determined policy coverages. Kacha argued the appraisers were supposed to determine valuations and not to make policy coverage determinations.

If you were the judge would you rule the insurance appraisers had authority to determine both valuations and coverages?

The judge said no!

Insurance appraisers are supposed to determine the valuations of insured losses, the judge began. Their job is not to determine insurance policy coverages, he noted.

Whether or not a loss is covered by an insurance policy is to be made by the insurer and, if the insured disagrees, the court can decide the coverage issue, the judge emphasized. Determining policy coverage is not the job of the insurance appraisers, he added.

Because Kacha did not waive his right to litigate policy coverage in court, and he did not cash Allstate’s checks, he is entitled to a court determination of the insurance policy coverage issues, the judge ruled.

Based on the 2006 California Court of Appeal decision in Kacha v. Allstate Insurance Co., 45 Cal.Rptr.3d 102.

(For more information on Bob Bruss publications, visit his
Real Estate Center

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