Cosmetic Damage Exclusion Stirs Controversy

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Actual Cash Value Adjustment for Roof Surfacing

Some insurers have already introduced cosmetic damage-type endorsements in conjunction with their homeowners policies. One such endorsement indicates that if the roof is more than 15 years old and damage to roof surfacing is caused by windstorm or hail, the loss will be adjusted on an actual cash value basis with deduction for depreciation. This endorsement defines roof surfacing as the outermost exterior covering of the roof of the dwelling or other structure.

Property other than roof surfacing that has been damaged will be adjusted on a replacement cost basis and there will be no deduction for depreciation — subject to the policy’s normal requirements. Thus, the actual cash value limitation applies only to roof surfacing. It is noteworthy that the actual cash value limitation does not apply if the insurer determines that the covered property is a total loss. The endorsement also states that the insurer will not pay more for the damaged property, including any roof surfacing, than the smallest of:

One such endorsement indicates that if the roof is more than 15 years old and damage to roof surfacing is caused by windstorm or hail, the loss will be adjusted on an actual cash value basis with deduction for depreciation.


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