In Iowa, a windstorm blew some shingles off one side of the wood shake roof of an insured's property that is insured with homeowners policy form HO 005 10/00 experienced. The roof is 30 years old and after the adjustor's inspection of the damage, the carrier said it is only going to pay for the cost of patching up the missing shingles that blew off.
The insured contacted a number of local contractors to repair the damage but none of them will even attempt to repair the damage because of the condition of the remaining shingles. Due to the roof's age, they thought that they would do more damage to the existing shingles.
Q: Is the carrier only required to pay for the repairs to the roof? Or, is it required to replace the entire slope of the roof since the individual shingles are not repairable?
Response 1: You may want to bring this Iowa statute to the adjustor's attention:
IOWA 191—15.44(507B) Standards for determining replacement cost and actual cost values. 15.44
(1) Replacement cost. When the policy provides for the adjustment and settlement of first-party losses based on replacement cost, the following shall apply:
a. When a loss requires repair or replacement of an item or part, any consequential physical damage incurred in making such repair or replacement not otherwise excluded by the policy shall be included in the loss. The insured shall not have to pay for betterment or any other cost except for the applicable deductible.
b. When a loss requires replacement of items and the replaced items do not match in quality, color or size, the insurer shall replace as much of the item as is necessary to result in a reasonably uniform appearance within the same line of sight. This subrule applies to interior and exterior losses. Exceptions may be made on a case-by-case basis. The insured shall not bear any cost over the applicable deductible, if any. 15.44
(2) Actual cash value.
a. When the insurance policy provides for the adjustment and settlement of losses on an actual cash value basis on residential fire and extended coverage, the insurer shall determine the actual cash value. “Actual cash value" means replacement cost of property at time of loss, less depreciation, if any. Alternatively, an insurer may use market value in determining actual cash value. Upon the insured's request, the insurer shall provide a copy of the claim file worksheet(s) detailing any and all deductions for depreciation.
b. In cases in which the insured's interest is limited because the property has nominal or no economic value, or a value disproportionate to replacement cost less depreciation, the determination of actual cash value as set forth above is not required. In such cases, the insurer shall provide, upon the insured's request, a written explanation of the basis for limiting the amount of recovery along with the amount payable under the policy. 15.44(3) Applicability. This rule does not apply to automobile insurance claims.
Response 2: The policy typically says it will pay the lesser of repair cost or replacement cost. If the only way to fix the roof is to replace it, then that's what the insurer owes. Just because an adjuster completes a repair estimate that comes up with a cost to repair doesn't mean the damage can be repaired.
Response 3: What is the cause of loss that would obligate the insurer to replace the undamaged portion of the roof? Time for your insured to replace their roof, unless your state has a law to the contrary—and they might.
Response 4: The best course of action is to have the insured obtain something in writing from one or, better yet, two contractors. Their estimate for replacing that side of the roof along with their comment on the estimate stating why they feel just replacing the few shingles would not be possible or practical. Present this to the carrier—speak to the claim manager if you need to—and ask for reconsideration.
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