Definitions HO 06 44

Definitions HO 06 43

Exclusions HO 06 44

Exclusions HO 06 43

Introduction

 Property damage insurance generally assumes that the damaged property, especially coverage A, affects the functioning of the property. A fire makes at least part, if not all, of the home uninhabitable; damage to windows lets in the elements; and water losses damage flooring, carpets, and anything on the floor.

 A lot of roof damage affects the functioning of the property; for example, a roof damaged by a tree or lightning no longer prevents water and other elements from entering the property. Likewise, damage to the siding can let rain inside the dwelling. Hail or windstorm can be a different scenario. Small hail can often cause only cosmetic damage that does not affect the functioning of the roof or the siding. Windstorms can blow debris across a roof that scratches it but does not affect the functioning. Replacing the roof or siding for cosmetic damage is costly and time consuming for both carriers and insureds, especially when the original structures still function as designed.

 In the past some carriers have balked at providing coverage since there is no reduction of functioning, just appearance. Insureds have understandably filed suit, seeing as the value of a home with pockmarks on the roof is less than one without such marks, even though the functioning may be the same. In Advance Cable Co., LLC v. Cincinnati Ins. Co., 788 F.3d 743 (7th Cir. 2015), the insured suffered damage to his metal roof from hail ranging from barely discernible to one inch in diameter; the hail left visible indentations in the roof, but caused no loss of functioning. The carrier refused to pay for the damage to the roof, and the insured filed suit for breach of contract. The court found for the insured, granting summary judgment, and the carrier appealed. Under the appeal the court held that the word "loss" applied to both functional and cosmetic damage, and that the insurer's denial was not in bad faith. Under Wisconsin law the word "physical" applies to hail damage to the surface of a roof as the hail changes the characteristics of the roof, even though functionality may not be changed.

 Another case had similar results. In Great Plains Ventures, Inc. v. Liberty Mut. Fire Ins. Co., No. 14-CV-1136-JAR, 2016 WL 590207 (D. Kan. Feb. 11, 2016), the scenario was the same: hail damage to metal seam roofs. The court held that "physical damage or loss" within the insuring agreements pays for hail indentations on metal seam roofs and that the insuring agreement unambiguously allowed for coverage of cosmetic hail indentations. Other cases seem to agree.

 However, the new endorsements that exclude coverage for cosmetic damage allow an insured to reduce his premium for a potential loss that does not affect the integrity of the roof, siding, or windows. Currently, HO 06 44, Roof Surfacing Cosmetic Damage Exclusion – Windstorm or Hail, is available in only some states; other states may adopt it later. The states in which the form is available are Arizona, Colorado, Idaho, Illinois, Iowa Kansas, Kentucky, Michigan, Minnesota, Missouri, North Dakota, Nebraska, Nevada, Ohio, Oklahoma, Oregon, South Dakota, Tennessee, Utah, and Wisconsin. HO 06 43, Cosmetic Damage Exclusion – Windstorm or Hail, is available in all the same states except for Kansas.

 Definitions-HO 06 44 Roof Surfacing Cosmetic Damage Exclusion – Windstorm or Hail

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 With respect to the provisions of this endorsement, the following definition is added:

"Roof surfacing" means the:

1.Shingles or tiles;

2.Cladding;

3.Metal or synthetic sheeting or similar materials covering the roof; and

4.Roof flashing.

This includes all materials used in securing the roof surface and all materials applied to or under the roof surface for moisture protection.

 Analysis

 So that the insured and the carrier are on the same page, the endorsement first defines "roofing surface." This includes shingles or tiles, cladding—which is simply something that overlays, specifically a metal coating bonded to a metal core—and metal or synthetic sheeting or similar materials and roof flashing. Included in roof surfacing is all materials used in securing the roof to the structure and all materials applied to or under the roof for moisture protection. Note that this does not refer to a vegetated roof; such roofs are unique structures and do not suffer hail damage such as dents and marring the way that solid roofs do.

 Definitions-HO 06 43 Cosmetic Damage Exclusion – Windstorm or Hail