Does Colorado Require Matching? Is Matching a Coverage Issue or a Factual Issue For an Appraisal Panel?

The answer to this question is found in an earlier blog post, An Insurer’s Obligation to Match: Comparable Materials and Quality, written by Jon Bukowski six years ago. A Colorado federal court opinion involving appraisal, matching, and bad faith rendered last week is the reason for this post about matching.1 I have another post dealing with the other aspects of that case tomorrow.           

Property insurance adjusters, appraisers, and umpires should visit the Matthiesen, Wickert & Lehrer, S.C. website. It has many resources available, including a paper with a 50-state survey regarding matching issues of residential properties: Matching Regulations and Laws Affecting Homeowners’ Property Claims In All 50 States. The introduction states:

It remains one of the most difficult issues to deal with in the world of property insurance. Homeowners’ insurance policies usually contain a provision obligating the carrier to repair or replace an insured’s damaged property with ‘material of like kind and quality’ or with ‘similar material.’ They cover property damage resulting from ‘sudden and accidental’ losses. When damage caused by fire, smoke, water, hail, or other causes results in a small portion of a home or building being damaged (e.g., shingles, siding, carpet, cabinets, etc.), whether and when a carrier must replace non-damaged portions of a building in order for there to be a perfect match remains a point of contention. It is a matter of great importance to insurance companies because ‘matching’ problems with a slightly damaged section of roof or flooring can lead to a domino effect of tear out and replacement costs of many items which are not damaged. The problem of partial replacement is especially troubling where the damaged siding or shingles have been discontinued, making it virtually impossible to properly match. To replace only the damaged portion would result in an obvious aesthetic deficit due to a clear difference in the appearance of the replaced portion of the building from the portion that remains undamaged.

Would the entire structure need to be re-sided or the entire roof re-shingled? Or is it sufficient to replace just one wall of siding or just a few shingles? Whether or not the insurance company must pay to replace entire sections of the structure in order to bring the property back to its previous uniformity and aesthetics can bring various state insurance laws and regulations into play. On the one hand, many pundits claim that the terms of the insurance policy require the carrier to pay the cost to ‘repair or replace with similar construction for the same use on the premises.’ They argue that ‘similar’ doesn’t mean matching exactly. Others argue that coverage for ‘matching’ and ‘uniformity’ under a homeowner’s policy doesn’t exist without a specific endorsement. The truth lies somewhere in between and can vary greatly from state to state.

The survey notes the sole Colorado trial court decision more thoroughly analyzed by Butkowski and stated:

After a windstorm damaged stucco outside a condominium, the insurer agreed to pay for patching the stucco but refused to pay for skim coating the stucco. The insured maintained that skim coating was necessary to create a uniform appearance. In April 2017, a District Court in Larimer County held for the insured finding that insurer must pay for the cost of skim coating to create a reasonably uniform appearance. Hamlet Condominium Ass’n v. American Mutual Family Ins. Co., 2016 CV 30594 (Co. Dist. Ct., April 12, 2017).

The answer to the first question of this post is that one Colorado trial court decision recognizes that matching is required.

The second question is a trick question. Whether the policy affords coverage for matching is a legal issue involving coverage. A policy could be written to unambiguously exclude any coverage for matching of undamaged portions of a structure. Alternatively, the policy could be silent on that issue and require legal and factual analysis on a state-by-state basis. 

Assuming the policy may entertain coverage for matching, the question is whether that matter is entirely legal and reserved for courts and juries to make factual findings or whether an appraisal panel can make those factual determinations as well. For example, Shane Smith and I filed an amicus brief on this issue for United Policyholders in Connecticut. The Connecticut Supreme Court held that an appraisal panel could make findings on matching, as noted in Matching is a Factual Determination and Can Be Resolved by Appraisal.

One lesson from today’s post is that Colorado has one case recognizing that matching is required. The more important lesson is that property insurance adjusters, loss estimators, appraisers, and umpires should fully read and study the concepts contained in the post by Jon Bukowski and found in the paper by Matthiesen, Wickert & Lehrer. Every person in the property insurance loss business should have a thorough understanding of these fundamental adjustment concepts and issues that arise every day.   

Regarding today’s photo, I was the sniper photographer of Jon Bukowski and Larry Bache. They had just informed me of a favorable multimillion-dollar resolution. Jon said that Larry’s white-rimmed glasses were his secret weapon during the negotiations.

Thought For The Day             

Architecture is inhabited sculpture.

—Constantin Brancusi

1 Bertisen v. Travelers Home & Marine Ins. Co., No 20-cv-03650 (D. Colo. Sept. 8, 2023).