When The Appraisal Umpire Goes Beyond The Depreciation Rate Of Both Claimant And Insurer

In a $1.2-million dispute arising from a property resort fire, an Ontario appraisal umpire did not exceed his authority when he used a much higher depreciation rate than both the claimant and the insurer did to calculate the value of the property, an Ontario court has found.

A resort property owned by Senator Real Estate was destroyed by fire in March 2018. Intact Insurance covered the property with a limit of just over $1.24 million for the building.

The two sides could not agree on the replacement cost value (RCV) or the actual cash value (ACV) of the building. Senator took the matter to appraisal, seeking an umpire’s ruling pursuant to s. 128 of the Insurance Act.

Before the matter headed to appraisal, Senator signed an interim proof of loss claim, which did not state a value for the RCV or ACV. Intact issued an advance payment towards the loss of the building for more than $818,000.

The insurer calculated that initial amount using a 44% depreciation factor and the lowest replacement cost estimate in its possession. Adjusters representing Senator and Intact exchanged several estimates for the cost to rebuild the building, but they never agreed on the RCV.