Appraisal clauses exist so that amount-of-loss disputes can be resolved informally, outside of court. They provide a common-sense mechanism for getting to the right number efficiently—without lawyers, judges, and juries. Unfortunately, some insurance companies routinely resist participating in the appraisal process by recasting what is plainly a valuation dispute as a coverage dispute. A recent decision out of the Eastern District of Tennessee pushes back on that tactic.

In JPP Holdings LLC v. State Farm Fire & Casualty Co., No. 3:25-CV-272-TAV-DCP (E.D. Tenn. Aug. 4, 2026), Judge Varlan granted the insured’s motion to compel appraisal after State Farm twice refused written demands to participate in the appraisal process under its own policy.

Background

JPP Holdings owned commercial property in Oak Ridge insured under a State Farm policy. After a May 2024 windstorm, State Farm inspected the property, confirmed wind damage, generated an estimate of $11,866.59, and paid $9,366.59 (estimate minus deductible). JPP contended the damage was drastically undervalued and demanded appraisal. State Farm refused—twice—arguing the dispute was about coverage (whether the damage occurred during the policy period), not about the amount of loss.

The Decision

The court found the policy’s appraisal clause is mandatory once invoked, based on its repeated use of “will.” See Morrow v. State Farm Fire & Cas. Co., 592 F. Supp. 3d 672, 675 (E.D. Tenn. 2022). The court rejected State Farm’s coverage-dispute characterization, reasoning that by generating an estimate and issuing payment, State Farm had already acknowledged at least partial coverage. The real disagreement was over how much additional loss existed—classic appraisal territory. As the court warned, “[o]therwise, insurance companies could avoid appraisal by claiming a coverage issue when additional loss amounts are disputed.”

The court also rejected State Farm’s procedural argument that the motion should have been filed under Rule 56, noting that Tennessee federal courts “regularly compel appraisal pursuant to such provisions” without requiring a particular Federal Rule. 

Importantly, the court noted that appraisal does not waive State Farm’s coverage or causation defenses—those can be raised after the appraisal process concludes. See Merrimack Mut. Ins. Co. v. Batts, 59 S.W.3d 142, 152 (Tenn. Ct. App. 2001). 

JPP Holdings is another reminder that once an insurer pays part of a claim, it has likely conceded the dispute is about how much—not whether. This case was particularly unique because appraisal was compelled even in the face of State Farm’s litigation strategy of contesting coverage by belatedly arguing the loss occurred outside the policy period.

A copy of the opinion can be accessed here. Kudos to McWherter Scott & Bobbitt, PLC attorneys Nan Steer and Baker Evans for their work in representing the firm’s client in this case and obtaining this favorable ruling.