We pay up to $50,000 for reasonable expenses for the taking of inventory and appraisals, incurred by “you” at “our” request to assist “us” in the determination of the amount of a covered loss caused by a covered peril. “We” do not pay for: a. any expenses incurred under the Other Conditions, Appraisal section of this coverage; or b. any public adjusters' fees or attorneys' fee.

It is our position that the CPA fees are covered under this provision. The carrier disagrees, apparently because it does not involve valuation of physical property. We believe this is covered for the following reasons. First, the standard definition of “appraisal” is “the act of judging the value, condition, or importance of something.” It is not limited to physical valuations.

The policy does not define “appraisal,” however, it distinguishes this appraisal from the appraisal clause. When appraisal occurs under the appraisal clause of the policy it often includes time element. The point being the term “appraisal” is a broad term and not limited to physical property valuations only.

As the policy itself does not define the term “appraisal,” it should be given its broadest meaning, which would include the valuation of time element losses as well as physical damage.

Further, and perhaps more significant, provision specifically states it applies to “determination of the amount of a covered loss.” Loss of income and extra expenses are covered losses, and the CPA was hired to provide the requested information to assist in the “determination of the amount of a covered loss,”( i.e. loss of income and extra expense). The provision does not state that appraisal includes only physical losses or excludes time element but rather uses the broader term of “determination of the amount of a covered loss.”

While it is my opinion this is clearly covered, if there is any confusions over the term “appraisal” or whether it applies to all covered” losses or only randomly selected covered losses, then it would create an ambiguity. And, as a matter of basic contract law, since the insurance policy is an adhesion contract drafted by the insurance company, all ambiguities are decided in favor of the insured and in favor of coverage.

Michigan Subscriber

The meaning of “appraisal” can include valuation of time element losses. But, is what the CPA contributed considered an appraisal? Did the CPA simply provide the supporting materials, or did the CPA make some judgment regarding the value of the loss? If the CPA was merely compiling documents to substantiate the claim as opposed to evaluating information to determine the amount of the loss, then the CPA's contribution would not be considered an appraisal based on the dictionary definition you provided. If, however, the CPA is providing some analysis or other evidence of judging the value of the loss, then the expenses should be covered, regardless if they are for a physical loss or time element loss—as you stated, the covered expenses are for determining the value of the loss, not the value of a physical loss.