Policy Language Expressly Prohibits Replacement of Undamaged Material to Match Damaged Material

Tred R. Eyerly | Insurance Law Hawaii

    Construing an all-risk Businessowners Policy, the court found that the policy language did not required replacement of undamaged material match materials that were damaged. Pleasure Creek Townhomes Homeowners’ Ass’n v. Am. Family Ins. Co., 2019 Minn. App. Unpub. LEXIS 1095 (Minn. Ct. App. Nov. 25, 2019).

    The policy covered the Association’s 14 townhome buildings. In June 2017, a hail storm damaged siding on all 14 buildings. An appraisal panel included the cost to replace the undamaged, faded siding in its appraisal award so that it would match the new siding. American Family refused to pay this component – which was appraised at about $211,382 – of the award. 

    An exclusion in the policy provided,

We will not pay to repair or replace undamaged material due to mismatch between undamaged material and new material used to repair or replace damaged material. 

We do not cover the loss in value to an property due to mismatch between undamaged material and new material used to repair or replace damaged material. 

After declining to pay for the undamaged mismatched siding, American Family moved for summary judgment, which the district court granted, finding that the policy excluded coverage.

    The appellate court affirmed. The Minnesota Supreme Court in Cedar Bluff Townhome Cond. Ass’n v. Am. Family Mut. Ins. Co., 857 N.W. 2d 290 (Minn. 2014), found that the mismatch between the old siding and new siding available constituted a covered loss, and obligated American Family to pay to replace all of the siding. But the policy in Cedar Bluff had no matching exclusion. Therefore, this case was distinguishable and the district court’s granting of summary judgment to American Family was affirmed. 

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