Minnesota Court of Appeals Issues Landmark Ruling on Insurance Appraisals

Published: April 2025

In a significant decision for Minnesota property owners, the Minnesota Court of Appeals recently clarified how and when insureds can demand an appraisal under their property insurance policies. The case, Ariel, Inc. v. State Farm Fire and Casualty Company (A24-0604), has major implications for commercial and residential policyholders navigating disputes over claim payments—especially those approaching their policy’s lawsuit filing deadlines.

Let’s break down what this ruling means and why it matters.

🔍 What Was the Case About?

Ariel, Inc., a commercial property owner in Minneapolis, suffered major fire damage to its building in May 2020. While State Farm paid out over $3.3 million, Ariel claimed an additional $1.5 million in unreimbursed losses. A lawsuit was filed just before the two-year statutory deadline to sue—but the appraisal demand came four months later. State Farm rejected the appraisal request, arguing it was untimely and lacked the proper documentation.

⚖️ Key Takeaways from the Court’s Decision

1. Appraisal Is Not a “Suit or Action” Under Minnesota Statute

The court ruled that demanding an appraisal is not the same as filing a lawsuit. Therefore, the two-year deadline under Minn. Stat. § 65A.01, subd. 3—which governs when policyholders must initiate legal action—does not apply to appraisal demands as long as the lawsuit itself is timely filed.

“An insured’s demand for an appraisal... is not a ‘suit or action’ on the policy,” the court stated. This interpretation reinforces that appraisal is a contractual dispute resolution tool—not a form of litigation.

📌 Why this matters: Property owners can now request appraisal after the two-year deadline has passed, provided they filed a lawsuit within that period. This provides greater flexibility for resolving valuation disputes without prematurely rushing to litigation.

2. Documentation Is Key—But Some Requirements Are Policy-Specific

The court affirmed that appraisal can only proceed when there is a clear dispute over the amount of loss—but what constitutes “sufficient documentation” varies.

In this case, the court noted that Ariel’s public adjuster submitted two Xactimate estimates—one showing the full loss and another showing the disputed difference between what was paid and what was claimed. This level of itemized detail aligned with the specific requirements of State Farm’s Minnesota appraisal provision, which mandates a detailed list of items in dispute before appraisal can proceed.

⚠️ Important Note: This kind of itemized dispute list is not a standard requirement across all insurance policies. It is specific to State Farm's Minnesota appraisal language, which is more detailed and restrictive than typical appraisal provisions found in other policies.

📌 Best Practice: Even if your insurer doesn’t require a formal list of disputed line items, presenting clear documentation of what work was completed, what was paid, and what remains unpaid can help establish your right to appraisal.

🧰 What Does This Mean for Policyholders?

This published appellate decision is now binding precedent in Minnesota and strengthens policyholder rights in several key ways:

• Appraisal Rights Are Broader Than Many Insurers Have Claimed: If you’ve already sued your insurance company within the statute of limitations, you can still pursue appraisal—even months later.

• You Don’t Need to File Suit and Demand Appraisal at the Same Time: This is a game-changer for claimants under tight deadlines. Appraisal discussions can follow initial legal action.

• Documentation Is Still Crucial—Even If Not Required by All Policies: The State Farm policy required highly detailed documentation to trigger appraisal. Other policies may not. But detailed documentation remains your best defense in any claim dispute.

🛠️ The Role of Public Adjusters in Building Stronger Claims

This case also highlights the value of working with a qualified public adjuster. Ariel’s adjuster didn’t just write an estimate—they provided well-organized, strategic documentation that aligned with State Farm’s strict appraisal requirements. That made all the difference in the appeal.

Public adjusters are trained to interpret policy language, document damages thoroughly, and negotiate directly with insurers—skills that are especially important when facing a complex or underpaid claim.

⚠️ Final Thoughts: Don’t Let Appraisal Deadlines or Documentation Gaps Derail Your Claim

While this ruling clarifies that the two-year deadline applies only to lawsuits—not appraisals—insurers like State Farm may still argue against appraisal if documentation is incomplete or vague.

If you believe your claim has been underpaid, don’t wait. A public adjuster can help you:

• Confirm whether your policy allows for appraisal

• Document a clear and supportable scope of loss

• Establish a dispute based on facts, not assumptions

• Present the case in a way that aligns with your policy’s language

📚 Learn More

Read the full court opinion here: Justia - Ariel, Inc. v. State Farm Fire and Casualty Company (2024)

Need help understanding your rights in an insurance claim? Reach out to a licensed public adjuster today.

A fire-damaged commercial building is assessed by a business owner.