Stuck in the Middle: When Two Carriers Refuse to Pay a Roof Damage Claim

An insured notices water leaking from their roof and calls a commercial roofer to make repairs. The roofer informs the insured that the roof has sustained significant hail damage.

The insured has been insured under building and personal property coverage form CP 00 10 10 12 since January 2015. Along with a hired engineer, the carrier claims adjustor inspects the roof and uses satellite images to determine that there is no hail damage to the newer roof panels, which had been replaced within the last three years. The team notes that the hail impacts were rusted, indicating to them that the damage occurred before January 2015. The carrier therefore denies the claim.

The agency then submits a claim to the carrier that insured the building prior to January 2015, also under form CP 00 10. This carrier goes through the same adjustment process and determines that there is hail damage, but that the damage occurred after 2015. As a result, this carrier also denies the claim.

Q: Which carrier is responsible for paying this six-figure claim?

Response 1: Whichever carrier was on the risk when the hail damage commenced.

Response 2: Your state’s department of insurance or a judge will have to tell you.

Response 3: Has the insured received a written and dated denial from both carriers? And do you have a confirmed date of loss referencing the dated satellite imagery? Check with surrounding property owners to place a better time frame for the date of loss. Also, check the form number. This should be a CP 10 30 special form. Based on the age of the claim, I’m guessing the best you’ll receive is actual cash value, less depreciation and the deductible.

Response 4: Invoke any arbitration provisions in the policies. If that doesn’t work, sue both carriers and let the courts figure it out.

Response 5: I regret to say that I think this is a legal matter beyond the scope of this forum. I’m also sorry to hear about carriers acting this way. Neither company is covering itself with glory.

Response 6: At this time, your insured might need to repair their own roof to prevent further damage. Given the dueling insurers, your insured will likely need to retain legal counsel to move matters to arbitration under the policies' provisions or file litigation.

Response 7: I am sorry to say that this situation may require the insured to seek legal assistance. But if you want to hold off on that route, try asking each insurer for additional proof that it is not responsible.

For example, if you can find out what hailstorms occurred in recent years, the size of the hail damage can be measured to determine which event caused the damage. Hail damage leaves dents, and the size of each dent can be used to pinpoint which hail event caused the loss. 

The current insurer claims that the presence of rust proves that their policy was issued after the actual damage was sustained. Maybe ask if any other property in the area sustained hail damage since the effective date of your insured’s policy. Hail damage does not affect only one property. If they had other losses in recent years with damage similar to your insured's loss, then you have a case for arguing that the rust that developed could in fact be related to past events during the coverage periods.

This question was originally submitted by an agent through the VU’s Ask an Expert Service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.