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Matching issues are frequently problematic when storms damage only portions of an insured structure’s exterior and it proves impossible to replace the damaged sections with material that is an exact match for the rest of the building’s roof or siding. Earlier this month, the Minnesota Supreme Court held that the phrase “comparable material and quality” means material that is suitable for matching; with respect to color, a reasonable match – not an identical match – is all that is required. In Cedar Bluff Townhome Condominium Ass’n. v. American Family Mut. Ins. Co., – N.W.2d – , 2014 WL 7156914, 2014 Minn. LEXIS 661 (Minn., Dec. 17, 2014), however, the court held that that meant that all of the siding on 20 buildings had to be replaced to avoid a color mismatch even though less than 2% of it had actually sustained hail damage.
The insured, Cedar Bluff Townhome Condominium Association, owned a residential complex that sustained hail damage in October of 2011. There was at least some siding damage to each building. The siding panels were 15 square feet in size, and between one and ten panels were damaged on each structure. Overall, however, less than 2% of the siding in the complex as a whole had actually been damaged by hail.
The policy issued by American Family Mutual Insurance Company afforded coverage for “direct physical loss of or damage to Covered Property,” and there was a Loss Payment clause that obligated the carrier to pay “the cost of repairing or replacing the lost or damaged property.” The contract of insurance was also written on a replacement cost basis, and it recited that replacement cost was determined based on the cost to replace the lost or damaged property with other property “of comparable material and quality.” The siding was 11 years old, and the color of the panels had faded. The manufacturer had replacement panels that were identical in model name, size, texture, and installation methodology, but they were not available in a color that matched the faded siding. American Family offered to pay $6,800 to replace those panels that had actually been damaged by hail, but Cedar Bluff sought over $361,000 to replace all of the 20 buildings’ siding.