Cosmetic Damage Exclusion Stirs Controversy


Adjusters International Disaster Recovery Consulting


Cosmetic Damage Exclusion Stirs Controversy Homeowner and Commercial Property Policies Affected

By Robert J. Prahl, CPCU


Cosmetic Damage Presenting New Insurance Dilemma

The widespread damages caused by volatile weather that seems to be the norm nowadays are clearly documented in media of all types. What’s not always as clear, however, is the extent to which the damages actually destroy a property or part of it — or harm its appearance more than its function.

While traditionally, most property owners have expected reimbursement from their insurance company in either case, that could be changing as insurance carriers seek ways to limit or modify their exposure — claiming that the effects of these widespread losses are wreaking havoc with their loss ratios.

The matter is still unfolding and its resolution will have significant consequences for policyholders and insurers alike.

In our two companion articles, veteran claims professional and respected author Robert J. Prahl, CPCU, offers the latest insight into this emerging issue.

Sheila E. Salvatore Editor

Recently introduced property endorsements have created spirited controversy among agents, adjusters and insurers. The endorsements concern roof damage, where claim frequency and severity are on the rise, due in large part to volatile weather conditions across the country. In essence, coverage for solely cosmetic damage from wind and hail in homeowner and commercial properties may be eliminated if insurers choose to use these endorsements. In addition, there is an option to provide coverage for roof damage on an actual cash value (ACV) basis, rather than on a replacement cost basis.