Ohio Court Ruling Upholds Appraisal Clause in Auto Insurance Claims
An Ohio appeals court recently delivered a notable decision for insurers, affirming that a binding appraisal clause in auto insurance policies can effectively halt class-action suits regarding total-loss vehicle claims. On April 23, 2026, the Eighth Appellate District in Cuyahoga County reversed a trial court’s certification of such a class action, highlighting the role of appraisal clauses, such as those employed by Farmers Insurance, in preemptively resolving disputes before reaching class-action status.
The case began in 2022 when Farmers Insurance provided coverage for James Stewart’s 2008 Honda Element. After an accident resulted in a total loss of the vehicle, Farmers compensated Stewart based on the vehicle's adjusted value of $9,795, inclusive of fees and a $500 deductible. Despite initially accepting the payout, Stewart filed a class-action lawsuit alleging that the insurer improperly utilized CCC Intelligent Solutions to impose a secretive "condition adjustment," which he claimed unfairly reduced the settlement by modifying comparable vehicle values.
Subsequent to the lawsuit filing, Farmers Insurance relied on the policy’s appraisal clause. This clause permitted either party to request an independent appraisal, whereby appointed appraisers would determine the actual cash value and loss amount, with their decision being binding. The trial court supported Farmers’ motion for appraisal and dismissed Stewart’s argument against the clause’s applicability post-litigation.
By April 2024, an appraisal re-evaluated the vehicle’s cash value, resulting in a higher figure than Farmers’ initial payout, prompting the insurer to issue an additional check. Stewart, however, did not cash the check and persisted with his lawsuit, seeking a new class certification that initially gained traction in the trial court.
Nevertheless, the appeals court reversed this certification. Judge Kathleen Ann Keough clarified that this case differed from previous instances where defendants made strategic offers to eliminate class actions. Instead, the court recognized the situation as one involving a contractual provision’s fulfillment, initially mandated by the court. With Stewart’s claim resolved through the appraisal process, the court concluded that no actionable controversy existed, thereby nullifying the class action attempt.
The ruling also addressed mootness exceptions, while acknowledging the broader insurance industry dialogue on condition adjustments, as the Ohio Supreme Court was poised to review this issue in Davenport v. Progressive Direct Insurance. This decision emphasizes for insurers the strategic value of appraisal clauses in resolving individual disputes and limiting litigation from escalating into class actions.