Some insurance companies in Minnesota have refused to pay to replace roofing materials under damaged shingles. This month the Minnesota Court of Appeals held that is impossible if the building materials must be replaced per state building codes. This is an important decision for all Minnesota property owners.
Insurance companies have denied coverage to replace roofing materials under damaged shingles by arguing their policies only cover damage directly hit by a storm. Under this principle, felt, roof decking, ice and water shield, and other materials are not directly hit by the storm would not be paid by insurance. A recent case from the Minnesota Court of Appeals rejects the insurance company’s position. This case is called Great Northwest Insurance Company v. Campbell.
Minnesota Statutes Section 65A.10 requires an insurer offering replacement cost coverage to pay for all damage at “the damaged portion of the property” if required by state building codes. This is mandatory coverage that no insurance company can circumvent with artful policy language. What does the damaged portion of the property mean? How far into the building does this law apply? This law has been on the books for years, but only recently have Minnesota appellate courts addressed the scope of this coverage.
We now know the extent of coverage of roofing. If the building codes require replacement of felt, roof decking, ice and water shield, etc., then there is coverage. This is true even if these items are not directly damaged by a storm. The purpose of the statute – like insurance – is to put the property owner in the same position as before the storm (or any insured loss). That cannot happen if a homeowner must pay out-of-pocket for materials essential to replace material directly hit by a storm. To my way of thinking, that is the purpose of the statute: to be sure the property owner is in the same position as before the insured event, be it a storm, pipe burst, fire, etc.
The principle that arises from this case is “the damaged portion of the property” is not limited to material directly hit by a storm. The relevant portion of the property is everything connected to the damaged item, such as nails, glue, etc. This principle can be applied in many different contexts.
This principle does not extend to all material throughout a building. One case argued that damage to a roof triggered repairs to a building foundation, simply because the building code official held the foundation must be repaired prior to repair of the roof. The property owner did not prevail in that action. Just a few years ago the Minnesota Supreme Court held damage a masonry component of a wall behind drywall was not covered even though the drywall was damaged by a storm. The Supreme Court held this principle must be applied on a case-by-case basis. We are fortunate to now have a case applying the statute to roofing.
Insurance companies may not write their way around coverage by issuing a new endorsement, or rider, to deny coverage of roof decking. Minnesota Statutes Section 65A.10 mandates insurance coverage. When insurance companies write a replacement cost policy no insurer can write terms that give less coverage than what the statute requires. The law will reform the policy to meet what the statute requires.
If you have an insurer that denies coverage of building material not directly hit by an insured loss, but which must be repaired due to the building codes, read this case and consider whether Minnesota Statutes Section 65A.10 requires coverage. If you have any questions or need help, feel free to email me. I can be reached at ed@beckmannlawfirm.com. A copy of the Great Northwest v. Campbell case can be found here: