I am an adjuster working on a large commercial apartment building fire. The policy form is a BP 00 03 01 10. All of the eight affected units have hardwood flooring planks in a couple of rooms in each unit that is covered with permanently installed carpet—it is installed with tack strips. The insured's contractor is requesting costs for the unfinished hardwood replacement in addition to the carpet and pad.

What is generally owed in a situation like this? Some feel that the insured is owed only for one finished floor. Would the insured be owed for unfinished hardwoods and carpet and pad? It does not appear that the insured will actually replace the hardwoods, yet they are still requesting the actual cash value amount.

In a similar vein, hypothetically speaking, would your answer be the same for the following scenarios?

(1) Many homes in North Carolina have two layers of shingles, as the new shingles were simply installed on top of the existing shingles. This is determined to be an accepted method of construction. What is your opinion on the scope of damage? Would the insurance company owe for two layers of shingles or just one?

(2) Same question for two or even three layers of vinyl flooring.

North Carolina Subscriber

For the first situation, the insurer should replace whatever covered property was damaged by a covered cause off loss, up to the policy limit, and subject to limitations and exclusions. So, if the hardwood planks were damaged by the fire, they should be replaced along with the carpeting. If the insured did not have hardwood planks and now wanted them, that would not be covered. If the planks were not damaged by a covered cause of loss—such as suffering damage when the tack strips were removed, but no fire damage—that would not be covered.

The hypothetical scenarios you mention are a little different than the coverage question. While it is acceptable to install new layers of shingles over old layers and new layers of vinyl flooring over existing, if the insurer owes for a new roof or floor, would it be desirable to replace multiple layers? With the original question, the insured had hardwood flooring planks beneath carpeting. If the floor needs replacing, switching the hardwood planking with an inferior material would not, in our opinion, indemnify the insured. But, tearing out old layers of vinyl flooring or shingles to replace a floor or roof would probably be the better option in those situations.