Functional or Cosmetic Damage Issues—Can an Expert Testify Whether the Damage is Functional Damage?

One case that came up for discussion at the Windstorm Insurance Conference in Orlando was an unpublished opinion1 about expert testimony in a case where the Allstate policy excluded cosmetic damage caused by hail. The appellate court was faced with the question of whether an expert could provide various opinions, including whether the alleged hail damage constituted functional damage.

The court reversed the grant of summary judgment for Allstate and impliedly indicated an expert can provide an opinion on whether the damage was “functional” damage:

The district court excluded: (1) testimony on ‘the policy provisions’ at play, with the exception of testimony that wind and hail are covered perils;  (2) testimony on ‘how one determines whether a roof has been damaged by wind or hail;’ and (3) testimony on whether the roof ‘was even damaged by wind or hail.’

The court’s exclusions do not address whether Wilson could testify to his expert observations that the damage was functional. Policy provisions, methods for discerning damage, and the cause of damage itself are irrelevant to that end. It should be noted that Wilson’s deposition occurred after Allstate moved to exclude Wilson’s prior testimony, and Allstate never amended its motion to reflect this deposition. In short, the judge’s exclusions did not bar Wilson’s expert testimony that the damage to the roof was functional.

Because the district court’s exclusions did not bar Wilson’s functional-damage opinion, it constitutes competent summary judgment evidence. As such, this evidence creates a classic ‘battle of the experts,’ which presents a question for the jury….The district court did not address this evidence and for that reason, summary judgment on the cosmetic damage exclusion was improper and the case will be remanded for the district court’s further consideration.

Based on this ruling, public adjusters and policyholders facing a cosmetic damage exclusion may have to obtain a hail damage expert to testify whether the damage is “functional” damage.

I am certain hailstorm losses will be the center of discussion at the Windstorm Conference next year in Dallas.

Thought For The Day

It is not the beauty of a building you should look at; it’s the construction of the foundation that will stand the test of time.

—David Allan Coe

1 Horton v. Allstate Vehicle & Prop. Ins. Co., No. 22-20533, 2023 WL 7549507 (5th Cir. Nov. 13, 2023).