Kentucky Insurance Commissioner Sharon P. Clark and the Kentucky Department of Insurance published an Advisory Opinion addressed to all admitted insurers and licensed adjusters authorized to investigate and settle property claims in the state, addressing the Department's interpretation of Kentucky Law 3 Section 9(1)(b). The law states that for fire and extended coverage policies that have replacement cost coverage:
"If a loss requires replacement of items and the replaced items do not reasonably match in quality, color, and size, the insurer shall replace all items in the area so as to conform to a reasonably uniform appearance. This applies to interior and exterior losses. The insured shall not bear any cost over the applicable deductible."
The Department states that their interpretation of "area" means the entirety of a part used for a specific purpose, such as an entire roof, an entire contiguous interior carpet, an entire contiguous interior tile floor, etc.
If the shingles on one side of a roof are damaged and must be replaced, and there are no shingles available that would reasonably match the undamaged side, then the entire roof must be replaced. Replacing the damaged shingles with shingles that do not match the original would diminish the value of the home, and the purpose of this regulation is to protect the value of an insured's home and other real property.
Any insurer utilizing forms in violation of this regulation must amend their filings by September 1, 2024, or they will be subject to administrative action. An endorsement placing a sublimit on matching undamaged areas of a home would constitute a violation.
The Advisory Opinion can be found here.
Kentucky is one of a number of states that have a specific matching statute codified in their law. The majority of states do not, but may have other laws that apply. A state-by-state chart can be found here:
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