State Farm Lloyds v. Johnson: Appraisal Can Reach Causation, Too
The 2009 Texas Supreme Court case that broadened the scope of appraisal to include causation questions tied to the extent of damage.
Before 2009, many Texas carriers argued that any dispute involving 'what caused the damage' was a coverage question and therefore off-limits to appraisal. The Texas Supreme Court disagreed in State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009).
The dispute was a hail claim on a homeowner's roof. State Farm's adjuster said only a few shingles on one slope were storm-damaged; the insured's roofer said the entire roof had to be replaced. State Farm argued the fight was really about causation — hail vs. wear — and therefore not appraisable. The Court rejected that framing.
The Court held that appraisers deciding the 'amount of loss' must necessarily decide the extent of damage from a covered peril, and that causation questions tied to that extent (how much damage came from the hail vs. how much was pre-existing) fall within the panel's authority. Pure coverage disputes — whether hail is covered at all, whether an exclusion applies — remain with the court.
Johnson is why appraisal is often the right tool for the 'partial roof vs. full roof' fight, the 'one slope vs. all four' fight, and similar scope battles. It also explains why carriers now frequently invoke appraisal themselves once they realize a panel will likely price the loss higher than their adjuster did.
Citation: State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009).