An American Family adjuster asked the appraisers to divide their estimate into two categories – one for replacing damaged shingles and another for replacing undamaged shingles that would not match those needed to replace the damaged ones.

The appraisers, however, did not perform the requested apportionment. Instead, they found that replacing the entire roof would cost $141,000 and simply noted on the appraisal form that, “This is a matching issue[.] Alternative products do not match current shing[l]e on the roof.”

The adjuster notified the Noonans that their insurance policy did not cover the cost of replacing shingles on the undamaged portion of the roof. Of the $141,000 needed to replace the entire roof, the adjuster estimated that $74,381 was due to the cost of matching.

American Family apparently paid the Noonans the amount of actual damages, less the deductible, but it refused to pay the rest.

The U.S. District Court for the District of Minnesota granted summary judgment in favor of the Noonans and confirmed the arbitration award.

American Family appealed to the Eighth Circuit.

The American Family Policy

The American Family policy provided that American Family would:

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

The Eighth Circuit's Decision

The circuit court reversed.

In its decision, the Eighth Circuit ruled that, because of the matching exclusion in the American Family policy, the insurer was not obligated to pay for damages attributable to matching difficulties.

The circuit court was not persuaded by the Noonans' argument that even if the matching exclusion was part of their policy, the policy should be reformed to cover all the losses they sustained because their policy had to provide the statutory minimum coverage of a standard fire insurance policy given that their policy insured against the peril of fire as well as other perils.

The circuit court reasoned that, assuming that the standard fire insurance policy required matching coverage, the Noonans' policy was not subject to reformation because their home was damaged by a thunderstorm, not fire, and the Minnesota law setting forth the standard fire insurance policy provided that policies insuring against fire and other perils “shall, with respect to the peril of fire, afford the insured all the rights and benefits of the Minnesota standard fire insurance policy.”

Because fire did not cause the loss, the requirements of the standard fire insurance policy simply were inapplicable, the Eighth Circuit concluded.

The case is Noonan v. American Family Mutual Ins. Co., No. 18-1393 (8th Cir. May 24, 2019). Attorneys involved include: For Thomas P. Noonan, Annette M. Noonan, Plaintiffs – Appellees: Edward E. Beckmann, Jason Scott Raether, HELLMUTH & JOHNSON, Edina, MN. For American Family Mutual Insurance Company, Defendant – Appellant: Deborah Ann Ellingboe, Jeffrey Justman, Aaron Daniel Van Oort, FAEGRE & BAKER, Minneapolis, MN; Mark K. Hellie, Washington, DC.