A Property Damage Insurance Nuance?

A recent court decision by the Supreme Court of the State of Minnesota held that an insurer was required under the terms of its policy to replace all of the siding on 20 buildings in a common interest community even though the greatest damage to one building from a hail storm affected only ten siding panels.  Eleven of the buildings had three or fewer siding panels damaged in the storm.  The Court in Cedar Bluff Townhome Condominium Association, Inc. v. American Family Mutual Insurance Company held that because the eleven year old siding could not be reasonably matched by the color of new siding, all of the siding on all 20 buildings in the complex would need to be replaced under the language in the policy that provided that damaged property would be replaced with "other property of comparable material and quality".

The HOA and the insurer were unable to agree on the amount of the loss after the claim was initially filed.  Under the terms of the policy the insured HOA had the right to request an appraisal to determine the amount of the damaged property.  The appraisal panel determined that, "that the original siding on the buildings could be ‘matched’ in terms of the same siding being commercially available from the same manufacturer and with the same model name, . . . texture, size and installation methods,” but “could not be matched in terms of color.” Siding of even the best quality after eleven years of wear from weather will fade.

Court held that the language of the policy did not require an exact or identical color match, it did require a reasonable match.  The Court went on to hold that the siding panels that were not damaged by the hail storm were nonetheless damaged because of the fading of the color.  Combining those two findings, the Court ordered the insurer to pay in excess of $350,000 to replace all of the siding on all of the buildings in the community.

Do you know the language that is in your homeowner's policy regarding the standard to be applied in determining what is an acceptable replacement for  damage to a component of your home under the "replacement cost" coverage provision?  Would you be entitled to replacement of all the siding on your home if only a few panels are damaged?  I know I am going to pull my policy and find out.  Could mean a difference between $6000 recovery and a recovery well in excess of that amount.