Cosmetic Damage Exclusion Stirs Controversy

ADJUSTERSINTERNATIONAL.COM

Notification

In keeping with the insurer’s responsibility to notify its insureds of important policy changes, particularly limitations in coverage, the insurer provides its insureds with such a notice. The notice indicates that there has been an important change to the policy and then proceeds to explain that if the roof is more than 15 years old, any loss to it will be adjusted on an actual cash value basis if damage is caused by windstorm or hail.

The notice also advises insureds that if the roof has been replaced at any time in the past 15 years, to contact the agent. The insured may be eligible for a premium reduction or for the roof replacement cost option. The options may also be available if the roof is replaced in the future — and insureds are advised to contact their agent then and to retain documentation of any roof updates, such as receipts or contractor invoices, for verification purposes.

As noted in the accompanying article, adjusting roof damage on an actual cash value basis in a loss involving a homeowners policy is quite a departure from current claim handling practices. In the absence of this endorsement, damage to the roof would be adjusted on a replacement cost basis, new for old, provided the homeowner insured met the 80 percent insurance to value requirement. This is so despite the fact that the roof is more than 15 years old.

It is noteworthy that the actual cash value limitation does not apply if the insurer determines that the covered property is a total loss.

…adjusting roof damage on an actual cash value basis in a loss involving a homeowners policy is quite a departure from current claim handling practices.


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