Do Non-matching Shingles Mean A Property Damage Insurance Carrier Must Pay for Full-roof Replacement?

5 Mar

For years, this question has clouded insurance claims determinations (adjustments) and the appraisals and other claims-resolution procedures available to the parties.  We may now have the Minnesota Court of Appeals’ answer in the form of QBE Insurance Corporation v. Twin Homes of French Ridge Homeowners Association, — N.W.2d —, 2010 WL 607409, *1 (Minn. Ct. App. Feb. 23, 2010).

The case involved a hail storm causing damage to some, but not all, of the shingles on the roofs of a 16-building townhome association.  The Association’s insurance policy stated the method of determining how much coverage applied in the event of a loss:

[W]e will pay no more than the least of the following:

a.  The cost to repair or replace the property at the same site, regardless if repaired or replaced at the same site or another, without deduction for depreciation:

(1) With comparable material;

(2) With property of the same height, floor area and style; and

(3) With property intended for the same purpose;

b. The amount actually and necessarily expended in repairing or replacing the property at the same site; or,

c. The limit of insurance.

QBE Ins. Corp. v. Twin Homes of French Ridge Association, 2010 WL 607409 at *2.  After the loss, the insured and the insurance company could not agree on the amount of the loss, so the community association demanded an appraisal pursuant to the policy.  Each party selected its appraiser and the two appraisers attempted to resolve the dispute.  When they could not they presented their opinions to the umpire so the three-member panel could review the issues and reach its decision.  From that point, as the Court of Appeals itself stated:

The appraisal panel determined that the loss could not be remedied by repair or replacement because the shingles used on the buildings were no longer manufactured and/or the non-damaged shingles were too worn to be suitable to connect to new shingles, so they rejected the first valuation method and applied the second.  Consistent with the policy’s second valuation method, they determined the amount that would need to be expended to repair the roofs by using comparable shingles. . . .  Consistent with the plain language of the insurance contract allowing the panel to value the loss at the amount actually and necessarily expended to repair or replace the shingles, the panel’s decision is a proper determination of the value of loss to respondent.

QBE Ins. Corp. v. Twin Homes of French Ridge Association, 2010 WL 607409 at *4 (emphasis added).  The Court of Appeals clearly acknowledged it was proper for the appraisal panel to conclude that shingles which are no longer manufactured may have to be replaced entirely.  In fact, this basis or the potential that even matching replacement shingles may not suitably connect to the existing shingles appears to warrant a full roof replacement.  It is unclear whether other factors may have motivated the panel’s decision as well, but it appears the Court did not necessarily rely on those other considerations.

Does this case require insurance companies to pay for full roof replacement each time there is demonstrable damage to only a few shingles?  Insurance companies will argue that it does not.  The battles over this issue are not likely to end, but for the time being, insured parties appear to have another weapon in their arsenal.  It remains to be seen whether the insurance company will ask the Minnesota Supreme Court to review (and possibly reverse) the Court of Appeals’ decision.

Entry by Matt Drewes.  Matt is a shareholder at Thomsen & Nybeck, P.A. and head of the firm’s Community Association Representation Group and Co-chairs the firm’s Construction Litigation Group.  He practices primarily in the areas of real estate litigation, townhome and condominium law, construction litigation, debtor/creditor law, insurance litigation and employment law.  Matt can be reached at


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