Federal Court Enforces Appraisal Award for Full Roof Replacement in Important Win for Tennessee Policyholders

An important new opinion regarding property insurance appraisals was just issued by Judge Aleta A. Trauger in the United States District Court for the Middle District of Tennessee in Nashville Commc’ns, Inc. v. Auto-Owners Mut. Ins. Co., No. 3:24-cv-01020, 2025 U.S. Dist. LEXIS 223455 (M.D. Tenn. Nov. 13, 2025).

McWherter Scott & Bobbitt proudly represents the policyholder, Nashville Communications, Inc. (“NashComm”), in this coverage dispute against Auto-Owners Mutual Insurance Company.

The Facts

In March 2023, a severe windstorm struck NashComm’s commercial building in Nashville, Tennessee. The storm displaced a section of the rubberized membrane covering the parapet wall and a metal joint cover, which allowed wind-driven rain to enter the roof system and cause interior water damage.

Auto-Owners retained an engineer who inspected the property and concluded that wind damage was extremely limited — essentially just the displaced parapet membrane and one metal joint. Based on that opinion, Auto-Owners estimated the amount of loss to be $2,204.75.

NashComm disagreed with Auto-Owners’ calculation of the amount of loss.  When the parties could not resolve the dispute, NashComm invoked the policy’s appraisal provision.  The policy’s appraisal clause is standard form language:

Appraisal

If we and you disagree on the value of the property or the amount of loss, either may make written demand for an appraisal of the loss. In this event, each party will select a competent and impartial appraiser. The two appraisers will select an umpire. . . . The appraisers will state separately the value of the property and amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be binding…

If there is an appraisal, we will still retain our right to deny the claim.

Before the appraisal began, the parties and the panel (the two appraisers plus the umpire) agreed to limit the appraisal to the costs associated with repairing the areas that Auto-Owners had already acknowledged — the displaced parapet membrane and the metal joint cover. Everyone understood the panel would not be deciding whether additional roof damage existed or whether the storm caused other alleged interior or moisture issues.

The appraisal proceeded on that limited scope. Auto-Owners’ appraiser submitted a repair estimate in the amount of $2,204.75 – the same as Auto-Owners’ initial estimate. NashComm’s appraiser submitted a much higher number. The neutral umpire ultimately sided with our client’s appraiser and on April 30, 2024, the panel issued an Appraisal Award of $187,469.10 actual cash value — an award that included full replacement of the entire roof system less applicable depreciation.

The umpire explained his reasoning in detail: although the roof was old and in poor condition, attempting to repair the roof and parapet would involve damaging surrounding materials.  Consequently, the only reasonable way to repair the admitted wind damage was to replace the entire roof.

Auto-Owners refused to pay the award. It claimed, without explanation, that the panel exceeded its authority by deciding coverage and causation issues. Auto-Owners continued to insist that spot repairs to the parapet were sufficient and that any other roof damage was due to wear and tear, poor maintenance, or long-term moisture issues — all excluded causes.  NashComm was forced to file a lawsuit seeking  to enforce the valid and binding appraisal award.

The Court’s Ruling

Judge Trauger granted NashComm’s motion for partial summary judgment and held that the appraisal award is binding and enforceable as a matter of law. The court rejected every argument Auto-Owners raised to avoid payment and held as follows:

1. Appraisal panels are entitled to determine the reasonable scope of repair and means/methods necessary to repair covered damage. Determining whether spot repairs or full replacement is required to return the property to pre-loss condition is part and parcel of determining the “amount of loss.”
2. Even when causation is a tangential issue, appraisers necessarily (and permissibly) make incidental causation findings when deciding the amount of loss caused by a covered event. Quoting State Farm Lloyds v. Johnson, 290 S.W.3d 886, 887 (Tex. 2009), the court stated, “[a]n appraisal is for damages caused by a specific occurrence . . . Any appraisal necessarily includes some causation, at least as an initial matter.” The court noted that Auto-Owners’ own corporate representative could not point to any actual causation determination in the award itself. The appraisal panel expressly clarified that its determination was limited solely to the methods and means required to repair the wind-damaged parapet wall, without addressing other sections of the roof that Auto-Owners contended were unaffected by the storm.
3. Tennessee courts indulge every reasonable presumption in favor of upholding appraisal awards. Mere disagreement with the panel’s reasoning or alleged errors of fact or law are not grounds to set an award aside.

The court therefore ordered Auto-Owners to pay the full appraisal award.

While NashComm’s claim for punitive damages remains viable in the case, the court dismissed the statutory bad-faith claim citing the lack of contention that Auto-Owners’ initial investigation of the claim and assessment of damages was conducted in bad faith.

Why This Decision Matters for Policyholders

This opinion is the latest of important appraisal decisions we have seen in Tennessee in recent years. Key takeaways:

– Appraisal is a powerful tool for policyholders. When insurers take unreasonably narrow positions on scope or repair methodology, appraisal can force them to face a neutral decision-maker.

– Appraisal panels have broad authority to decide whether replacement (rather than patch-type repair) is necessary to repair covered damage — even when the insurer insists spot repairs are sufficient.

– Incidental causation findings are inevitable and permitted during an appraisal and do not give the insurer a basis to refuse payment.

In the NashComm case, the fact that the appraisers expressly limited their appraisal to the parapet damage was extremely important. The panel stayed within that scope — it simply concluded that the reasonable means/methods necessary to fully and properly repair the admitted wind damage was a full roof replacement.

In short, Judge Trauger’s opinion reinforces what we have been saying for years: the neutral appraisal panel is made up of professionals who understand how to evaluate property losses and what is necessary to repair the damage; the purpose of appraising a loss is to resolve the entirety of the damage, not just a portion of it; appraisal awards are supposed to be a final assessment of what is needed for a full repair and what that repair will cost; and, important, insurers do not get to ignore appraisal awards simply because they dislike the result. After all, the appraisal provisions are written by the insurance company and included in the policy, voluntarily, by the insurance company. Compliance with the policy that it authored is not too much to ask of ones insurance company.

We are proud to have obtained this result for NashComm. This is a big win for Tennessee policyholders facing underpaid or denied property claims.

If your insurer is refusing to pay a fair appraisal award or is trying to limit the scope of an appraisal, contact us. We handle these cases on a contingency-fee basis all over the Midwest and Southeast.