Documentation evasion allegations ignite appraisal battle in federal court

Legal Insights

By Tez Romero

Nov 24, 2025Share

Travelers Lloyds has challenged a hail storm claim appraisal, alleging the insured dodged documentation demands and pursued improper procedures. 

When a hail storm damaged a Texas commercial property in late September 2024, the claim seemed straightforward enough. Then months of friction over documentation, valuation disputes, and procedural maneuvering landed the case in federal court this month. 

Travelers Lloyds Insurance Company filed a declaratory judgment action on November 18 against VSS Carriers, Inc., seeking to invalidate an appraisal demand and umpire appointment it contends violated core policy requirements. At the heart of the dispute: a $354,000 gap between what Travelers paid and what the insured claims the damage is worth. 

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The timeline matters here. VSS Carriers reported the alleged hail damage on March 3, 2025, more than five months after the September 25, 2024 loss. Travelers issued an initial payment of $257,773.68, followed by a supplemental $285,116.59, totaling $542,890.27. VSS Carriers rejected this and claimed the damage should be valued at $896,812.40, insisting on an additional $148,082.27 for general contractor overhead and profit. 

The valuation dispute centers on how the policy reads. Travelers points to language stating the insurer will pay replacement cost but not more than "the amount you actually spend that is necessary to repair or replace the lost or damaged property." The insured wanted overhead and profit included despite lacking those actual expenditures at the time of demanding appraisal. 

But the real tension emerged over documentation. Starting in May, Travelers repeatedly asked VSS Carriers for proof of what was actually spent on repairs, including invoices and payment records. Requests continued through summer with no response. This matters because the policy requires insureds to cooperate in claims investigation and settlement, and to permit inspection of records proving the loss. 

When VSS Carriers invoked the appraisal clause in August, Travelers agreed conditionally, but only if the insured produced documentation and limited the appraisal to covered damages. Tensions escalated when Travelers formally withdrew from the appraisal process in early October, citing missing documentation. 

What happened next raised questions. VSS Carriers unilaterally petitioned the state court for umpire appointment that same day, which was granted immediately. The insured's designated appraiser then submitted a position statement and proposed award directly to the appointed umpire without Travelers' participation. 

The incident highlights a growing tension in claims handling. Travelers argues that cooperation and documentation requirements are conditions precedent to appraisal, meaning an insured cannot invoke appraisal without first satisfying these contractual duties. Without them, the insurer contends, there is no legitimate dispute to appraise. 

According to the filing, all three key documents supporting the claim contain identical figures of $896,812.40, raising questions about the documentation itself. 

A federal court will ultimately decide whether VSS Carriers complied with policy requirements and whether the appraisal process can proceed as initiated. For now, the case represents a flashpoint in how insurers and insureds navigate valuation disputes and enforce policy conditions. 

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