Hail-Damaged Roof: Two Deductibles, Excluded Wear, and a Matching Demand
A Kentucky HO-3 policy on a 1978 ranch shows Coverage A of $350,000, a $1,000 all-peril deductible, and a separate $5,000 wind/hail deductible. A June storm with 60-mph gusts and quarter-size hail damages the 25-year-old three-tab roof, bends two sections of aluminum gutter, and punctures three window screens. Your inspection finds 40 hail strikes on the south and west slopes; the north slope shows granule loss and curling consistent with age. The insured already paid a roofer $2,500 to tarp the roof and now demands a complete roof replacement, all new gutters, and $6,000 because the new roof will supposedly make his vinyl siding look mismatched. The contractor's replacement cost for the roof is $28,000 with $9,000 depreciation; the gutters are $1,800 replacement cost with $600 depreciation.
1. Calculate the first payment you should issue and explain how the two deductibles and the north-slope damage are handled.
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Step 1 - Separate covered from uncovered damage. Hail strikes and wind damage on the south and west slopes are a covered wind/hail loss. Granule loss and curling on the north slope is deterioration, an excluded cause of loss. Age alone does not make the policy owe for that slope.
Step 2 - Value covered damage at ACV. Roof: $28,000 - $9,000 = $19,000. Gutters: $1,800 - $600 = $1,200. Screens: $150. Tarp: $2,500 (a reasonable expense to protect the property from further damage, payable as part of the loss). Total ACV = $22,850.
Step 3 - Apply one deductible. The wind/hail deductible is an occurrence deductible. It applies once to this storm, not once per item and not once per slope. $22,850 - $5,000 = $17,850.
Step 4 - Do not stack the $1,000 all-peril deductible on top. The specific wind/hail deductible supersedes it for this cause of loss.
Issue $17,850 with a written breakdown showing the $9,600 in withheld recoverable depreciation and the excluded north slope.
2. The insured insists the entire roof and all the siding must be replaced for 'matching.' How do you evaluate and document that demand?
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Roof. The policy promises to repair or replace damaged property; it does not promise to modernize undamaged property. The question is whether the damaged slopes can be restored to a reasonably uniform appearance. If the shingle is still manufactured and a competent roofer can blend the slopes, pay for the damaged slopes only. If the shingle is discontinued so that repair would produce a visible patchwork, replacing the full roof is a reasonable cost of restoring the damaged portion and should be paid. Get the roofer's written statement that the shingle is unavailable, photograph the transition, and note the reasoning in the file before approving.
Siding. The roof replacement does not touch the siding. Unless the policy carries a matching or cosmetic-damage endorsement, there is no direct physical loss to the siding and the $6,000 claim fails. 'It will look different next to a new roof' is not a covered loss.
Deny the siding in writing, quoting the insuring agreement, and keep the roof decision separate so a dispute over one does not stall the other.
3. What must the insured do to collect the withheld depreciation, and what is your obligation on the undisputed portion of the claim while the dispute continues?
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Release of depreciation. Recoverable depreciation is released only after the insured actually repairs or replaces and submits invoices. The policy sets the clock - commonly 180 days to notify of intent to repair and up to two years to complete. If the insured takes the ACV and never repairs, the depreciation is never owed. Tell him the deadlines in writing at the time of the first payment so he is not later surprised.
The undisputed portion. Pay it now. Withholding the whole claim to gain leverage in the siding argument is exactly the conduct Kentucky's unfair claims practices statute targets - failing to attempt in good faith to effectuate prompt, fair, and equitable settlement once liability is reasonably clear. Nothing about the matching dispute makes the $17,850 uncertain.
Issue the payment, state the open items in writing, and document that the depreciation remains available on proof of completion.