The parties agreed on two things: that the loss was covered, and that the policy had been in effect on the date of loss. However, Meadows and State Farm could not agree on whether the policy covered the issue of ensuring a match between the existing shingles and the replacement shingles and whether there should be coverage to replace the roofs of some buildings that had had mismatched shingles before the hailstorm occurred.

When Meadows filed a motion to confirm the appraisal award, State Farm filed a motion to vacate that award. After some legal tug-of-war over discovery and clarity of court orders, each party filed for summary judgment in its own favor.

Match to Existing Shingles

The loss payment provision of Meadows’s policy stated that, should State Farm choose to pay the value of lost or damaged property after a loss, the value of the property would be determined at replacement cost (RCV), without deducting depreciation, for “the cost to replace, on the described premises, the lost or damaged property with other property of comparable material, quality and used for the same purpose” (emphasis original).

The judges looked to Cedar Bluff Townhome Condominium Association v. American Family Mutual Insurance Company, 857 N.W.2d 290 (Minn. 2014), an earlier decision from the Supreme Court of Minnesota where the justices had determined that a property owner was entitled to matching coverage for damaged siding under an insurance policy that, like Meadows’s State Farm policy, would calculate the value of a loss “based on the cost to replace the lost or damaged property with other property... [o]f comparable material and quality” (internal quotes omitted).

Though cases concerning matching coverage following a storm-related loss were each unique, the Meadows case was distinguished by State Farm’s challenge to coverage for mismatched roofs that pre-dated the loss occurrence. Unfortunately for State Farm, a comparison of Meadows’s policy with the policy at issue in Cedar Bluff showed that those policies “[were] not factually distinguishable.” The judges determined, therefore, that Meadows was entitled to matching coverage for all of the buildings with a mismatched roof, even if the mismatch pre-dated the loss.

State Farm responded that no part of the policy at issue indicated that State Farm was willing to put Meadows in a better position than it had been before the hailstorm caused damage. This argument was dismissed as “contrary to the policy's language and Minnesota law.” Interpreting the policy as State Farm suggested would, for all intents and purposes, be equivalent to calculating Meadows’s loss at actual cash value (ACV) instead of replacement cost value.

Though the policy at issue had a laundry list of exclusions that State Farm would not cover, matching was not one of them. The court pointed out that, once the insured has shown he is entitled to coverage, it is up to the insurer to prove the alleged coverage is excluded. In the absence of a provision that specifically excluded matching, the policy was, at most, ambiguous. An ambiguous policy also worked against State Farm, because ambiguous policy provisions are generally interpreted in favor of the insured.

Conclusion

As stated above, the policy at issue in this case was functionally identical to the policy at issue in Cedar Bluff, where the Supreme Court of Minnesota determined the insured was entitled to coverage for matching siding. Based on the precedent set in Cedar Bluff, and because matching was not specifically excluded, the court held that Meadows was entitled to matching coverage. The appraisal award was confirmed, and State Farm was obligated to ensure the roofs on each of Meadows’s 37 condo buildings matched, regardless of when the mismatch first occurred.

Editor’s Note: Matching is tricky. This case is unique because the court determined that the insured was entitled to coverage for mismatched roofs that pre-dated the loss occurrence. While some courts have determined that an insured is entitled to coverage for matching, very few of those cases have extended that coverage to existing damages.

However, once the property is damaged, if the new material doesn’t match the existing, whether the existing matched or not, all the property should be replaced barring policy exclusions. While insurance is intended to put the insured in the same position as he or she was before the loss, some courts have said being in a “better position” post-loss is the goal of replacement cost coverage. In Rockford Mut. Ins. Co. v. Pirtle, 911 N.E.2d 60 (Ind. Ct. App. 2009), the court said "Any purported windfall to an insured who purchases replacement cost insurance is precisely what the insured contracted to receive in the event of a loss." Matching is a complex issue within the industry, with certain forms specifically excluding it and some states creating statutes that require an insurer to replace undamaged property in order to restore the insured to pre-loss conditions.

Read More:

Matching Statutes by State

State Court Says Absence of Definition for "Like Kind and Quality" Requires Matching

Partial Summary Judgment Awarded to Insurer on Insured's Matching Claim

The Matching Game and Pre-Loss Conditions