Cosmetic Damage Exclusion Stirs Controversy


Potential Issues/Problems

As noted earlier, the introduction of these limiting endorsements is at least a partial response by insurers to confront mounting claim frequency involving volatile weather-caused losses that adversely affect their bottom line. Frankly, mounting claim frequency (and severity) affect the entire country: from conflagrations in California; wind, hail and tornadoes in the Midwest and South; to wind, hail and hurricanes on both coasts.

Despite the insurers’ rationale for introducing these limitations, they are not necessarily being welcomed by agents and insureds. There are pitfalls and problems that will confront insureds, insurers and adjusters alike. The meaning of “cosmetic damage,” despite the fact that the term is defined in the policy, may still create debate and controversy. Here are some of the issues with these endorsements:

Cosmetic damage is damage that affects the appearance but not the function of the roof, … .