The District Court for the Eastern District of Pennsylvania determined that an insurer need not cover a full replacement of the siding on the insured’s house, but there was expert testimony that prevented a similar judgment regarding a complete roof replacement. The case is Grote v. Am. Econ. Ins. Co., 2025 U.S. Dist. LEXIS 17326 (E.D. Pa. 2025).
What Happened
The Grotes purchased a homeowners policy from American Economy Insurance Company (AEIC) to cover damages to their Pennsylvania home. The home suffered physical damage when a nearby tree landed on part of the Grotes’ house during a windstorm. The couple hired a handyman to make emergency home repairs to mitigate further damage. They also sought the help of a public adjuster “to ‘advise and assist’ them in the adjustment of the insurance claim” they submitted to AEIC.
The public adjuster for the Grotes investigated the damages alongside a field adjuster from AEIC. Each adjuster came up with an estimated replacement cost value (RCV) and actual cash value (ACV) for the Grotes’ damaged home. The policy defined RCV as the value “at the time of loss, to repair or replace the damaged property with new materials of like kind and quality, without deduction for appreciation” (emphasis added). The Grotes’ policy stated that losses under coverage for their house would be paid on an RCV basis, but they would receive no more than the ACV of the damaged property until the repairs were actually completed. Shortly after the adjusters’ investigation, AEIC issued a payment to the Grotes for approximately $6,300 based on their field adjuster’s estimates.
The public adjuster, however, made a markedly different estimation of the home’s replacement cost value: almost 10 times as much. What the public adjuster accounted for that the field adjuster had not was a complete, rather than partial, replacement of the Grotes’ roof and siding. The original siding used on the Grotes’ house was no longer in production, so it was necessary to find “new materials of like kind and quality” to use for the repairs. Partial replacements, according to the public adjuster, were not appropriate because the siding and shingles used for repairs would not match the original materials, resulting in a noticeably different physical appearance.
Upon learning of the public adjuster’s valuation, AEIC sent a second adjuster to calculate a revised estimate that accounted for some of the repairs the public adjuster recommended that did not appear in the original valuation; this second estimate resulted in a second payment made to the Grotes for the difference between the original and the revised estimates. The second payment, however, only accounted for replacing the damaged portions of the roof and siding on the Grotes’ house, not full replacements.
The Allegations
After a second request for full replacement of the roof and siding was denied, the Grotes filed suit for breach against AEIC. The case was sent to arbitration, but AEIC sought partial summary judgment regarding the Grotes’ request for full replacement of both the roof and the siding, including the portions that had not been damaged.
Coverage for the Siding
Though there was no dispute over coverage for the damaged siding, the Grotes argued that the mismatched replacement materials AEIC planned on using were not on par with the quality of the original siding. Since no siding “of like kind and quality” was available to replace the damaged siding, the Grotes claimed they were entitled to have all of the siding replaced so the house would have a uniform appearance. AEIC, on the other hand, argued the quality of the siding wasn’t an issue because the policy did not cover the undamaged siding.
Insurance is a matter of contract law, so judges will enforce a policy as it is written to the extent the policy language is “clear and unambiguous.” The judges in this case analyzed the Grotes policy and found an exclusion that specifically disclaimed coverage for the replacement of exterior surfacing materials that did not match the existing, undamaged materials when the original materials were no longer produced or otherwise unavailable.
The Grotes claimed AEIC was obliged to replace all of the siding based on Collins v. Allstate Ins. Co., 2009 U.S. Dist. LEXIS 115778 (E.D. Pa. 2009). In that case, the court had denied an insurer’s motion for summary judgment because materials “of like kind and quality” were not available to repair only the damaged portion of the insured’s roof.
The judges were not convinced, because the Grotes had misunderstood the Collins decision. The insured in Collins showed sufficient evidence to create a triable issue of material fact regarding whether materials “of like kind and quality” materials were actually available, and factual issues cannot be resolved in summary judgment. Even if that weren’t the case, the policy at issue in Collins had not contained a provision that explicitly excluded coverage for replacement of existing, undamaged materials that did not match replacement material. The Grotes policy did contain such an exclusion, and therefore AEIC was not obligated to replace the undamaged siding on the Grotes’ house.
Replacing the Roof
The issue of whether AEIC had to completely replace the Grotes’ roof was not so cut and dry as the debate over the siding. AEIC argued there was no coverage for the undamaged part of the roof because the Grotes had not proved the roof had been damaged by either the storm or the fallen tree. An expert for AEIC testified he had found some interesting damages on the Grotes’ roof, but he could not say definitively whether the tree or the windstorm had caused that damage because “[n]o photographs or observations from the site inspection indicate that the tree damaged the shingled part of the roof,” and there wasn’t enough evidence to establish that the roof had been damaged by the wind.
The Grotes, in turn, offered the testimony of the public adjuster who had handled their claim as well as submitting an invoice from the handyman who had made emergency repairs after the storm. The public adjuster opined that the damages he observed on the roof were too new to have occurred before the storm, and he therefore believed that the storm had caused damage to the Grotes’ roof. AEIC objected to the public adjuster’s testimony regarding the cause of the roof damages, pointing to several cases where courts had prohibited an adjuster from giving his or her opinion on the cause of damage.
The judges acknowledged that, in Coates v. Metro. Prop. & Cas. Ins. Co., 625 F. Supp. 3d 347 (E.D. Pa. 2022), the court had ruled that public adjusters are not qualified to offer an affirmative opinion on the cause of a loss simply because they are public adjusters; like any other expert witness, they have to have something more, such as knowledge, experience, or training, relevant to the circumstances of the loss. In this case, there was sufficient evidence in the record showing that the public adjuster, before he received his adjuster license, spent a number of years as a general contractor with an emphasis on roofs and windstorm-related damages. This experience, combined with his years of experience as a public adjuster, gave him special “‘skill or knowledge greater than the average layman’ that qualifie[d] him” to offer an opinion on what, exactly, had damaged the Grotes’ roof. Since the public adjuster did, in fact, have the “something more” contemplated by the court in Coates, his opinion could not be summarily dismissed without further investigation.
Conclusion
The policy exclusion for matching replacement materials to existing, undamaged materials meant AEIC was only obligated to cover repairs to the damaged portion of the Grotes’ siding and not a complete replacement of both the damaged and undamaged siding. The judges awarded summary judgment to AEIC regarding a complete replacement of the siding.
On the other hand, the public adjuster who testified on behalf of the Grotes had enough experience that his opinion on the causation of the roof damage could not be dismissed without further investigation. Therefore, the judges said it was up to the arbitration panel to determine exactly how much weight the public adjuster’s opinion was due. Summary judgment regarding what AEIC was obligated to cover for the roof repairs was denied.
Editor’s Note: The extent to which replacement materials must match existing, undamaged materials is a hot-button topic in the insurance sphere. What it means for replacement materials to be “of like kind and quality” compared to the existing, undamaged materials, like much of insurance law, depends on the state.
Fourteen states–read our “Matching Statutes by State” article to find out which ones–have statutes on the books that, in the absence of materials that match in “quality, color, and size,” require an insurer to replace a certain amount of the existing, undamaged materials to achieve “a reasonably uniform appearance.” Some of these states narrow the replacement to “all items in the damaged area” (10 Cal. Code Regs. 2695.9, emphasis added), while others mandate that “the insurer shall replace all such items” (Conn. Gen. Stat. Ann. §38a-316e, emphasis added). States that don’t have specific matching laws typically rely on state- and fact-specific precedents to resolve the issue. As these laws have been developed and cases have been decided in favor of insureds, insurers have started revising policy language to specifically excluded replacing undamaged property even if the repairs will not match the existing components.
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