Matching is required in Kentucky. A Kentucky regulation requires insurance companies to “replace all items in the area so as to conform to a reasonably uniform appearance.”1 The problem for policyholders is that the Kentucky federal courts will not enforce the regulation.

What Is the Matching Law for Shingles in Kentucky?

State Insurance Commissioner Sharon Clark recently posted an advisory opinion seeking to clarify matching law in Kentucky. It notes that a new roof must be installed “if the shingles on one slant of a residential roof must be replaced due to damage covered by an applicable property insurance policy” and there are no matching shingles that would “render the slant in question reasonably uniform to the remainder of the roof.”

The bulletin goes on to state that if individual shingles can be replaced with others of the same make and model, then a full roof replacement is not needed even if the shingles may differ in color due to age.

Is Kentucky a Line of Sight State?

Matching laws require insurance companies to pay for comparable materials when items are lost or damaged and exact replacement components can’t be found. Many states use a “line of sight” rule, holding that everything within a viewers line of sight must have a uniform appearance. However, Kentucky regulations do not use this standard, as we see in the bulletin quoted above.

Broken shingles along a roof line

Matching Law in Kentucky Federal Court: Nationwide Case Study

A Kentucky case involving hailstorm damage ended up in federal court with a dispute about whether matching could be considered by an appraisal panel.2 The court noted the dispute between the parties:

Nationwide maintains Gardiner is demanding it replace “undamaged shingles to ‘match’ replaced shingles and soft metals that are covered under the Policy” which would result in “a windfall that [Gardiner] did not bargain for under the Policy and coverage for which it did not pay a premium.” Gardiner contends that both Kentucky law and the Policy require Nationwide to match the entire roof with any shingles replaced during repairs to the roof vents.

Personally, I would have challenged Nationwide’s attorney about the alleged windfall because Kentucky clearly has a regulation preventing what Nationwide is doing. Indeed, if the Kentucky Department of Insurance took notice that Nationwide is conducting itself in this manner and fined the insurer for this wrongful conduct, nobody should be surprised.

Court Findings

However, the Kentucky federal court found there was no private right of action and somehow parlayed that legal reasoning into a ruling that insurance companies are free to violate Kentucky insurance regulations.

Recently this Court held this ‘regulation cannot be enforced in a private action.’ Cincinnati Specialty Underwriters Ins. Co. v. C.F.L.P. 1, LLC, No. 3:14-CV-40-DJH-DW, 2015 WL 5793951, (W.D. Ky. Sept. 30, 2015); see also Advanced Mech. Servs., Inc. v. AutoOwners Ins. Co., No. 3:14-CV-388-DJH-CHL, 2017 WL 3381366, at *8 (W.D. Ky. Aug. 4, 2017) (‘[T]his Court and its sister district have repeatedly held, [the regulation] is inapplicable in private litigation . . . .’… As this Court explained in Woods Apartments, LLC v. U.S. Fire Insurance Co., No. 3:11-CV-00041-H, 2013 WL 3929706 (W.D. Ky. July 29, 2013):

The regulation Plaintiffs cite clearly provides that ‘[a] violation of this administrative regulation shall be found only by the executive director. This administrative regulation shall not create or imply a private cause of action for violation of this administrative regulation.’…As this Court has found ‘[t]he plain language of this regulation states that it neither creates nor implies a private cause of action for an alleged violation.’ Brantley v. Safeco Ins. Co. of Am., 2012 WL 4959528 (W.D. Ky. Oct. 12, 2012); Accordingly, plaintiffs cannot sue under this regulation.

Cincinnati Specialty Underwriters Insurance Co., however, was a declaratory judgment action brought by the insurance company to appoint an umpire. Cincinnati Specialty Underwriters Ins. Co., 2015 WL 5793951…The policyholder brought a counterclaim for the amount of loss sought by its appraiser based on Kentucky’s ‘matching law’, but ultimately the parties ‘filed competing briefs regarding . . . specifically, whether the chosen umpire should be instructed that cosmetic matching of the siding is required . . . .’ Id. at *1-2. Thus, squarely before the Court was the applicability of this regulation to the insured’s policy that, like Gardiner’s, required replacements ‘with other property of like kind and quality’. Id. at *3. The Court held that Section 9 does not ‘establish that ‘[m]atching is required by Kentucky law . . . .’ ‘ Cincinnati Specialty Underwriters Ins. Co., 2015 WL 5793951…see also Woods Apartments, LLC, 2013 WL 3929706, at *2 (‘The regulation does not support Plaintiffs’ argument that Defendants are legally obligated to repair or replace portions of the Property that were not damaged . . .[,] because the regulation imposes no such requirement . . . .’). Gardiner has not proffered any reason for the Court to depart from its prior rulings.

The Bottom Line: Enforcing Regulations

While I agree that the policyholder cannot sue for a private bad faith cause of action for damages, that does not mean the insurer’s contract and performance obligations can escape Kentucky regulatory law. The entire purpose of the law is to prevent Nationwide from not matching the undamaged and damaged portions of the building. While I understand the court’s logic, it is simply flawed. It ignores what Kentucky requires Nationwide to do.

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Thought For The Day

Illogical thinkers throw names and slurs around because they have no arguments with which to rebut their opponents. Rational people have to keep hammering their points home.
—Ben Carson
1 806 KAR 12:095 § 9(1)(b).
2 Nationwide Gen. Ins. Co. v. 1616 Gardiner Lane, Inc., No. 3:20-cv-00651(W.D. Ky. June 16, 2021).