The Supreme Court of Alabama has held that insureds must comply with post-loss obligations to provide information and examinations under oath before there can arise a genuine dispute as to the amount of the loss which would allow them to invoke appraisal. Baldwin Mut. Ins. Co. v. Adair, 2014 WL 4851516 (Ala. Sept. 30, 2014).

An insurer received correspondence from an attorney representing dozens of policyholders purporting to invoke appraisal for prior losses. The insurer sought and obtained a preliminary injunction on the grounds that it was premature to begin appraisal before the insurer investigated the disputes. The insureds counterclaimed alleging fraud and breach of contract. Fourteen of the insureds provided information regarding their claims and again invoked appraisal. The trial court ordered the insurer to commence appraisal as to these insureds, finding that they satisfied their post-loss obligations. The insurer appealed.

The Alabama Supreme Court reversed and remanded. It held that the policy wording did not permit either party to invoke appraisal until there was a disagreement over the amount to pay. It concluded that no genuine disagreement could arise until there was information from which the insurer could determine whether it had a duty to pay the claim. Because the insureds’ compliance with their post-loss obligations to provide requested information and submit to an examination under oath was a condition precedent to the insurer’s duty to pay, the Supreme Court concluded that appraisal could not be invoked.