1:16-cv-03860
N.D. Ill.Jan 26, 2017Background
- Windridge of Naperville Condominium Association (Windridge) submitted an insurance claim to Philadelphia Indemnity Insurance Company (PIIC) for hail damage to one building on May 20, 2014.
- PIIC paid $2,111,717.96 for conceded covered losses but Windridge contends additional amounts are owed.
- Windridge demanded appraisal under the policy over three disputed items: (1) payment to repair the building’s north and east sides (undamaged) to match repaired sides, (2) reimbursement for general-contractor overhead and profit ("10 and 10"), and (3) certain roof repair costs.
- PIIC refused to participate in appraisal and also argued Windridge’s notice of loss (four months after the storm) was untimely.
- Windridge moved to compel appraisal; the court evaluated whether each dispute is a coverage question (for the court) or an amount-of-loss question (for appraisal), and whether notice was timely.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether appraisal applies to repairing undamaged north/east sides to match repaired sides | Repair to undamaged sides is part of the loss (aesthetic mismatch) and the appraisers can decide if that constitutes "damage" and amount | This is a coverage question—whether the policy covers repairing sides that were not physically damaged—so not subject to appraisal | Denied. Coverage question for the court; appraisal not appropriate for this issue |
| Whether appraisal applies to reimbursement of general-contractor overhead & profit (O&P) | O&P are part of the cost to repair/replace (amount of loss) and appraisal should resolve whether a general contractor was required | Coverage question, not amount-of-loss (PIIC argued it need not pay O&P) | Granted. Appraisal appropriate to determine if a general contractor was required and thus whether O&P are part of the loss |
| Whether appraisal applies to disputed roof costs | The dispute is over cost/amount for roof repairs (scope largely agreed) and so falls within appraisal | PIIC conceded roof dispute was minor and related to amount | Granted. Appraisal applies to roof cost disputes (amount of loss) |
| Timeliness of notice (4-month delay) | Notice was timely; delay not unreasonable and did not prejudice PIIC | Delay was excessive and could forfeit coverage | Held timely for purposes of ordering appraisal. Four-month delay not unreasonable here and PIIC showed no prejudice |
Key Cases Cited
- Lytle v. Country Mut. Ins. Co., 41 N.E.3d 657 (Ill. App. 2015) (appraisal inappropriate for coverage disputes about ordinance/compliance costs)
- FTI Int’l, Inc. v. Cincinnati Ins. Co., 790 N.E.2d 908 (Ill. App. 2003) (appraisal not proper to resolve entitlement to replacement cost vs. sales price)
- Village of Ringwood v. Foster, 932 N.E.2d 461 (Ill. App. 2010) (discussing damage estimates that include overhead and profit)
- McLaughlin v. Attorneys’ Title Guaranty Fund, Inc., 378 N.E.2d 355 (Ill. App. 1978) (purpose of notice is to enable prompt, thorough insurer investigation)
- Country Mut. Ins. Co. v. Livorsi Marine, Inc., 856 N.E.2d 338 (Ill. 2006) (reasonableness of notice includes consideration of prejudice to insurer)