In the area of property damage law, one of the hot topics these days is matching. If only a portion of a structure is damaged and the material to be used to repair or replace the damaged portion is no longer available, is the insurance company required to replace the entire area so the siding, shingles, etc. all match? The Missouri Court of Appeals recently reversed a case regarding matching and sent it back to the trial court. The case is Alessi v. Mid-Century Insurance Company.1
In April 2012, a hail storm damaged the siding on the north side of Alessi's property. Mid-Century paid $2,072.53 to Alessi for the Actual Cash Value to replace the siding on the entire north side of the house. However, the siding was no longer manufactured, so Alessi demanded that the siding on the entire house be replaced. Mid-Century refused forcing Alessi to file suit.
The policy at issue stated:
We insure for accidental direct physical loss to property described in Coverage A [Dwelling] and B [Separate Structures].
Covered loss to Buildings under Coverage A and B will be settled at replacement cost without deduction for depreciation, subject to the following methods: (1) Settlement under replacement cost will not be more than the smallest of the following: (2) (a) the replacement cost of that part of the building damaged for equivalent construction and use on the same premises. (b) the amount actually and necessarily spent to repair or replace the building intended for the same occupancy and use.
Mid-Century filed a motion for summary judgment and argued that based on the above language they only owed for replacing the damaged portion of the siding, not for siding on the entire house. They also argued that only the north side sustained direct physical loss. The trial court granted the motion. Alessi appealed and argued the insurance company owed for 'equivalent construction.' The appellate court acknowledged that Alessi had a replacement cost policy which garners a higher premium for repair or replacement with material of like kind and quality, finding it irrelevant that a homeowner may receive a windfall and be in a better position after a loss. Using Black's Law Dictionary, the court found the definition of 'equivalent' to be: "1. Equal in value, force, amount, effect, or significance; 2. Corresponding in effect or function; nearly equal; virtually identical."2 The court construed this definition for finding broad coverage and determined that 'equivalent' requires replacement to be "equal in value" and "virtually identical." Alessi argued that matching is required under the policy. The court reasoned that the value of Alessi's property would be reduced with mismatched siding. If the insurance company's suggested replacement is not "equal in value" then they have not fulfilled their responsibility per the insurance contract, regardless if just the north side of the house was damaged by hail. However, if "nearly identical" siding could be found then replacing just the north side would meet the contractual obligations.
The court found this ruling not to conflict with the language requiring "direct physical loss" because "[w]here a risk specifically insured against sets other causes in motion in an unbroken sequence between the insured risk and the ultimate loss, the insured risk is regarded as the proximate, or direct, cause of the entire loss."3 The hail damaged the north side of the property and continued directly from that event. Whether the replacement siding is virtually identical or mismatched is a question for the jury.4 The trial court's ruling on summary judgment was reversed.
To answer the question posed by this blog: Is matching required in Missouri? The answer is yes, if the material used will be a mismatch to the material already present, and no, if the new material used is virtually identical to the old material. What is "virtually identical" can still be a point to argue and a question to be decided by a jury if suit is filed.