In California, missing the 100-day deadline to challenge an appraisal award under the state’s arbitration-style appraisal law can instantly end an insurance dispute, no matter how strong the claim. A recent California post-appraisal ruling in Bansal v. Nationwide Mutual Insurance Company 1 offers an important reminder about the consequences of appraisal and the strict procedural rules that govern it in California. Earlier this year, I made the following remark in Don’t Like the Appraisal Award? Here’s Why That’s Not Enough to Avoid Its Finality, which is applicable to this case:
The appraisal process is not a trial run or a preliminary negotiation. It is usually the end of the road. Those who enter it must do so with seriousness, understanding that the outcome will likely be final and enforceable.
The California insurance dispute arose from a July 2021 water leak in the Bansals’ home. After initial payments, disagreement over the scope and cost of repairs led to a contractual appraisal. The appraisal panel awarded $165,000 for replacement cost, which Nationwide paid in full. The insureds then sought additional amounts for moving expenses, temporary housing, food costs, fair rental value, and appraisal fees. Nationwide moved for summary judgment, contending it had paid all covered amounts and that the appraisal award barred any further recovery for repair-related costs.
Nationwide’s position was that the appraisal award encompassed all building-related expenses under Coverage A, including moving and pack-out costs necessary to complete the repairs. It also argued that additional living expense claims were either time-barred under the policy’s 24-month limit or unsupported by proper documentation. The temporary housing claim involved Airbnb stays more than two years after the date of loss and after the award’s five-month period of restoration, while the food expense claim lacked evidence of the insureds’ normal pre-loss costs, making it impossible to calculate the necessary increase covered under the policy.
As for fair rental value, Nationwide pointed out there was no evidence the property was rented or held for rental at the time of loss. It also asserted that without a breach of contract, there could be no bad faith, and that the genuine dispute doctrine further insulated it from liability.
The policyholders countered that moving costs were not part of the appraisal because the panel was only authorized to determine repair costs to the dwelling, not additional living expenses. They argued that late documentation of temporary housing and food costs did not automatically defeat coverage, as California law requires the insurer to show substantial prejudice from late notice. They maintained that they never permanently relocated to their second home and only rented the Airbnb to oversee repairs, and that they provided a reasonable method to estimate food cost increases when exact pre-loss receipts were unavailable.
They also claimed entitlement to fair rental value based on their intent to rent the property once repairs were complete. Finally, they contended that delays, repeated requests for documents, and an unduly narrow reading of the policy amounted to bad faith and justified punitive damages.
The court sided entirely with Nationwide. It concluded that under California law, which treats appraisal as a form of contractual arbitration, the award was final and binding absent a timely petition to vacate or modify within 100 days, as required by California law. Because the insureds had demanded that the panel appraise the entire loss to the dwelling, and moving costs were necessary to facilitate repairs, those expenses were part of the award.
The temporary housing claim was denied by the court because the costs were incurred outside the policy’s time limits and without timely documentation. The food expense claim failed for lack of proof of the increase above normal costs, and some of the claimed expenses were unrelated to the loss. Fair rental value was denied because the property was neither rented nor held for rental at the time of loss. Without a breach of contract, the bad faith and punitive damage claims also failed.
This case has several lessons for policyholders and public adjusters. In California, appraisal is governed by statutory arbitration rules, not the common law, and the statutory deadlines for challenging an award are unforgiving. Once an award is issued, any repair-related cost not expressly excluded is likely to be deemed resolved, so parties must be clear about what is included in the appraisal demand.
Additional living expense claims require both prompt documentation and proof of the increase over normal costs. Policy time limits, such as the 24-month cap on ALE, are often strictly enforced, and it is more difficult to obtain them as consequential damage in a bad faith lawsuit. Because some jurisdictions will not entertain bad faith damages if there is no breach of contract based on the insurer’s timely payment of an appraisal award, preserving the right to claim benefits in the contract action or appraisal is essential.
From a practical point of view, the insurer certainly paid far too little on its initial payment in relation to the final appraisal award. However, the public adjuster’s demand was equally too high. The appraisal panel nearly split the two views in the middle. This point, along with the lack of cooperation and documentation not provided by the policyholders, obviously impacted the court’s view of the case.
Thought For The Day
“California is a garden of Eden, a paradise to live in or see; but believe it or not, you won’t find it so hot if you ain’t got the do re mi.”
—Woody Guthrie
1 Bansal v. Nationwide Mut. Ins. Co., No 23-cv-05527 (N.D. Cal. Aug. 10, 2025).
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