Coverage First: Court of Appeals Makes Clear Issues of Coverage Must Be Decided Before Appraisal Can Be Invoked & Identifies Who Is Really an Interested Party

Citing to Dupree v Auto-Owners Ins Co, 497 Mich 1, 5–6 (2014), the panel once again made clear whether a condition precedent required to enforce a particular policy provision had been met was a question of coverage. Often, insureds demand appraisal and/or commence litigation, asserting that the insurer’s refusal to proceed with appraisal after making some payments constitutes a breach of policy. What we are once again reminded of is that whether the insured has complied with the conditions precedent to coverage – such as providing documentation supporting the claim or timely completing repairs – are issues of coverage which are reserved exclusively for the courts and must be resolved before appraisal can be ordered. It is imperative that insurers, in responding to demands for appraisal, clearly and specifically identify the coverage issues which remain and why appraisal is inappropriate at the time the demand is made.

As to the determination of necessary party status, the panel highlighted that a party must be joined under MCR 2.205 if the party’s presence is necessary to render complete relief. In this case, because the policy contained a provision allowing the mortgagee to seek relief even if the insureds’ claim was denied, the panel did not view the mortgagee as a necessary party.

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