One area of dispute in property insurance claims involving hail or storm damage is how much needs to be replaced. When part of a building’s roof or siding is damaged as a result of a storm, sometimes the replacement material is no longer available. The issue becomes does the entire roof or siding have to be replaced in order to achieve a perfect match?

The Minnesota Supreme Court, in Cedar Bluff Townhome Condominium Association, Inc. v. American Family Mutual Insurance Company,1 recently considered this issue. The insured, Cedar Bluff, was a condominium association with 20 multi-unit residential building. In a hail storm in October 2011, the siding of all 20 buildings were damaged by hail. At the time of the storm, the siding was 11 year old and the colors of the panels had faded. Replacement panels were available from the same manufacturer with the same specifications, however the panels were not available in the same color. The policy provided that American Family had to pay Cedar Bluff for “direct physical loss of or damage to Covered Property at the premises . . . caused by or resulting from any Covered Cause of Loss.” The policy also contained a Loss Payment Clause which provided that American Family agreed, at its option, to:

  1. Pay the value of lost or damaged property;
  2. Pay the cost of repairing or replacing the lost or damaged property;
  3. Take all or any part of the [damaged] property at an agreed or appraised value; or
  4. Repair, rebuild or replace the property with other property of like kind and quality . . . .

The policy further provided that American Family was to “determine the value of the Covered Property. . .[a]t replacement cost.” Further, replacement cost was to be determined based on the cost to replace “the lost or damaged property with other property. . .[o]f comparable material and quality.” (Emphasis added.)

Cedar Bluff submitted a claim to American Family. Cedar Bluff argued that all of the siding on each building had to be replaced because there would be a color mismatch with the existing panels if only the damaged siding panels were replaced. American Family disagreed and claimed that the policy only required replacement of the individual panels damaged by the storm. They also argued that even if the replacement panels were available in the original color, the exact color match of the panels was not possible because the color of the siding had faded. American Family elected the second option of the Loss Payment Clause. The parties could not agree on the amount of the loss as to the replacement cost and it went to appraisal.

A dispute arose whether the policy language providing for replacement of “damaged property with other property. . . [o]f comparable material and quality” required replacement of all siding, even undamaged siding, in order to provide a color match. The appraisal panel concluded that while the original siding could be “matched” in terms of the same siding being commercially available from the same manufacturer, it could not be matched in color and therefore there was not a “reasonable match available.”

The district court granted summary judgment to American Family and on December 2, 2013, the Court of Appeals reversed. American Family petitioned for further review to the Minnesota Supreme Court which issued an opinion on December 17, 2014, ruling that the appraisal panel did not err in determining that the replacement of the insured’s damaged siding with a siding of comparable material and quality required replacement of all of the siding on all 20 buildings to achieve a reasonable color match.

First, the Court determined that the phrase “comparable material and quality” in the policy means “a reasonable color match between new and existing siding” and concluded that “on the spectrum of resemblance, ‘comparable material and quality’ requires something less than an identical color match, but a reasonable color match nonetheless.” Second, the court determined that “color mismatch constitutes ‘direct physical loss of or damage to Covered Property’”. Here, the buildings sustained a “distinct, demonstrable, and physical alteration” because the color mismatch resulted from the inability to replace hail-damaged siding panels with siding of “comparable material and quality”, meaning siding panels that reasonably matched. Third, the Court determined that the appraisal panel applied the correct legal standard because the appraisal record was replete with references to the words “reasonable match”.

This is a critical decision for policyholders across the country who have property damaged from a storm such as roofs or siding where the insurance company is refusing to pay for the full replacement cost based on an issue of matching.


1 Cedar Bluff Townhome Condominium Ass’n, Inc. v. American Family Mut. Ins. Co., No. A13-0124, — N.W.2d —,  2014 WL 7156914 (Minn. Sup. Ct. December 17, 2014).

  • James W. Greer, CPCU

    Shane, would it not be reasonable, in this post, to also caution policyholders and their representatives, just as a carrier, TPA, or IA firm should caution its adjusting staff, that a ruling of the MN Supreme Court is really enforceable only in Minnesota and has no real force of law in Florida and other states. True, the ruling, and more importantly, its rationale and/or dicta, can be very influential, and even find support in states with similar statutory law or jurisprudence. However, it would be very bad for policyholders, carriers, or adjusters (of any kind) to blindly think of this ruling as a guide for behavior in their own state. In other words, a short disclaimer that says, “Check the law of the jurisdiction in which the damaged property lies…yadda, yadda. Otherwise, good job! I believe the rationale is just as important, if not more than, the ruling itself. Jim

  • Kyle Larson

    I am aware of rulings across the country that favor insured’s, however often times insurer’s tell us “so what, that decision only applies in state it was decided” What is the legal ramifications of a decision like this in Colorado for instance? And is there any way to compel insurer’s here in Colorado to adhere to it without some insured actually litigating this issue in Colorado?

  • mac mcintyre

    …are there any rulings specifically regarding roofing….hail and or wind damage???… this is the biggest issue affecting claims around here in austin…the largest insco reps are telling the policyholders …”in a windstorm they don’t pay for undamaged parts of the roof”!!…the same insco never allows for o/p..u have to file and then fight for it..sometimes they give in just before it goes to umpire… usually,”diminished value” comes into the discussion….right after….” the policyholder is to be made WHOLE”….got any thoughts or advise??(besides talkin’ to a lawyer)..the fee is way past the amount recoverable….thanks..Mc

  • This is an excellent ruling on behalf of policyholders! Thanks for sharing and providing the information.

  • Graham Grimes

    Sorry, we’re they held liable to replace all of the siding because of match or lack of—-laymans terms???

  • Joey Whitherspoon

    Are there any similar rulings for windows? Can the same rationale be applied to clusters or banks of windows? We suffered hail damage in Colorado and our insurance company will only replace windows directly damaged by the storm, not windows directly beside or below identical windows in the same cluster (separation from half-an-inch up to two inches in clusters of 3, 4, and 9 in different rooms). I fear the mismatched windows would detract from the appearance of our home and devalue it. The manufacturer of all the windows in our home went out of business in 2010.