Suppose a pipe bursts in a hotel, causing water damage to an entire floor, and requiring the replacement of that floor’s carpeting.  As it turns out, however, that style and pattern of carpeting is no longer available anywhere.  The hotel insists that its interior must have a consistent look and feel to it throughout the building, and that the only way the hotel could be restored to its pre-loss condition would be by finding a new replacement style of carpeting to install not only on the affected floor, but throughout the entire building—including on floors that sustained no water damage whatsoever.  Should the hotel’s first-party commercial property policy cover the cost of replacing all carpet throughout the building?

What if, instead of the damage occurring to the interior of a building, a hailstorm had caused direct physical damage to one side of the building’s exterior.  Once this one side is repaired and repainted, however, there is no way to avoid a situation where it will no longer “match” the rest of the building in the way that it had immediately prior to the loss.  If the insured insists that its policy covers the cost of repainting the entire building’s exterior anew (including the unaffected sides), what should the carrier do?

The hypotheticals above are based on real claims, and they illustrate the concept of “matching,” which is something that has arisen more frequently in recent years.  Stated simply, in the first-party property insurance context, the concept of “matching” arises in situations where the repair or replacement of only the damaged portion of a property allegedly results in an overall visual or aesthetic mismatch.  If there truly is no way to repair or replace just the damaged portions of a building in a manner that does not leave the insured with an overall non-uniform appearance or partial visual mismatch, the insured might claim that the policy should cover the cost of similarly repairing or replacing the undamaged portions too.

The problem with “matching,” of course, is that it tends to defeat the purpose and intent of property insurance.  Most first-party property policies (whether “all risk” or “named perils,” and whether commercial or personal) share one basic commonality: they insure against direct physical damage to property.  That the insured might one day submit a claim seeking coverage under such a policy for a wholly undamaged portion of its property is virtually never something that is within the contracting parties’ contemplation at the time of underwriting.  Yet, that has not stopped some courts in recent years from issuing decisions that, taken literally, would seem to allow certain insureds to recover for “matching” costs.[1]

The hailstorm hypothetical, for example, is based on the Minnesota Supreme Court’s decision in Cedar Bluff Townhome Condominium Ass’n v. Am. Family Mut. Ins. Co., 857 N.W.2d 290 (Minn. 2014) which construed an insurance policy’s reference to coverage for “comparable material and quality” to mean that the insurer must replace every siding panel on all of the insured’s buildings – even though only some of them were damaged – all to avoid a color mismatch between new and existing siding.[2]  There, the parties were unable to find replacement panels in a color reasonably matching the existing ones and, according to that court, a color mismatch would constitute a “physical alteration” to the buildings as a whole.[3]  Consequently, the court ruled that the insured was “entitled to have all of the siding panels . . . replaced,” including the undamaged ones.[4]

Similarly, a federal court in Washington concluded that an insured was entitled to recover for matching because the policy defined the covered “property” in a manner that included an entire condominium complex, supposedly meaning that “any ‘replacement’ [of property with that of ‘like kind and quality’] must necessarily restore the entire condominium to its condition before the fire—a condition in which there was no visual mismatch between the east and west towers.”[5]

A state court in Colorado recently held that a policy’s use of the term “comparable materials and quality” effectively required the insurer to pay for “‘skim-coating’ of the [Exterior Insulation Finish System of the building] to provide for visual matching of the stucco-like siding after physical damage caused by the hail storm.”[6]

The carpeting hypothetical at the outset of this article was inspired by Great Am. Ins. Co. v. Towers of Quayside No. 4 Condo. Ass’n , No. 15-CV-20056, 2015 WL 6773870 (S.D. Fla. Nov. 5, 2015), an interesting decision issued by a federal court out of Florida that seemed to take a somewhat middle-of-the-road approach to the “matching” problem.  There, a broken valve on an air-conditioning unit released water, damaging drywall, carpeting, baseboards, insulation, and wallpaper on certain parts and floors of a twenty-five story condominium building.[7]  The court rejected the insured’s argument that the damage “must be determined from the perspective of damage to the building as a whole, that the building as a whole suffered direct physical damage from water, and that the policy covers all costs necessary to restore the building to its pre-loss, aesthetically uniform condition.”[8]  Although the court ultimately ruled against the insured and in favor of the insurer on the question of “matching,” the court also concluded that matching, for purposes of achieving “aesthetic uniformity,” might be appropriate where repairs concern “any continuous run of an item or adjoining area.”[9]

The good news for carriers is that most of the “matching” decisions we surveyed involved courts enforcing policies’ “direct physical damage” language exactly as written, thereby rejecting insureds’ efforts to recover for “matching” costs.[10]

Just this year, for example, a federal district court in Texas rejected an insured’s attempt to recover for the cost of repairing an entire roof following a windstorm that caused a tree to fall onto it, thereby damaging only a portion of it.[11]  The court reasoned that the policy covered only “physical losses” which, read plainly, meant that coverage extended only to those roof tiles that sustained a “‘demonstrable, physical alteration,’” and obligating the insurer only “to pay for repair of the physically damaged tiles.”[12]

Although there have been, as discussed above, a few recent “rogue” decisions on this issue, those cases appear to set forth a minority viewpoint that seems to be completely contrary to the contracting parties’ intent and that would lead to unbargained-for results.  As one federal court put it, the position “that [the insureds] are entitled to replacement of the roof and siding of all the apartment buildings to achieve cosmetic matching, would be unduly burdensome on [the insurers] and would essentially result in a windfall to [the insureds].”[13]  Moreover, this minority viewpoint would seem to apply only in narrow circumstances that depend largely on the context and the exact policy language at issue, and then only if the insured is able to proffer evidence of the unavailability of comparable or similar material to be used to replace the damage.[14]

In sum, the majority view, as far as we can tell, still remains the same: full effect should be given to the “direct physical damage” wording as written, and recovery for undamaged property should be disallowed.  But, carriers should be weary that there are a few recent decisions out there that seemingly rule otherwise, rightly or wrongly, in certain unique circumstances.  As courts continue to address this issue in the future, we remain hopeful that the contracting parties’ intent will be “matched” by their rulings.



[1] It should be noted that, depending on the type of coverage at issue, some jurisdictions do have statutes on the books that specifically regulate if and when coverage for “matching” is to be afforded.  See, e.g., Fla. Stat. Ann. § 626.9744(2) (West 2019) (homeowner’s replacement cost policies only) (“When a loss requires replacement of items and the replaced items do not match in quality, color, or size, the insurer shall make reasonable repairs or replacement of items in adjoining areas.”).

[2] Id. at 294 (“[W]e construe the phrase ‘comparable material and quality’ to mean a reasonable color match between new and existing siding when replacing damaged siding.”).

[3] Id. at 295.

[4] Id. at 296; accord, e.g., Windridge of Naperville Condo. Ass’n v. Philadelphia Indem. Ins. Co., No. 16 C 3860, 2018 WL 1784140, at *3 (N.D. Ill. Apr. 13, 2018) (“[The insurer] contends that because only the south and west elevations suffered ‘direct physical ‘loss,’’ it need only replace the siding on those elevations.  That contention, while attractive at first glance, rests on the premise that the phrase ‘Covered Property’ refers to the building on an elevation-by-elevation basis as opposed to the building as a unified whole.”).

[5] 160 Lee St. Condo. Homeowners’ Ass’n v. Mid-Century Ins. Co., No. C17-1170-MJP, 2018 WL 1994059, at *4 (W.D. Wash. Apr. 27, 2018).

[6] Hamlet Condo. Ass’n v. Am. Family Mut. Ins. Co., No. 2016 CV 30594, Slip Op. at 2, 9-10 (Colo. Dist. Ct. Apr. 12, 2017).

[7] Id. at *1.

[8] Id. at *3.

[9] Id. at *3.

[10] See, e.g., Palm Bay Yacht Club Condo. Ass’n, Inc. v. QBE Ins. Corp., No. 10-23685-CV, 2012 WL 13012457, at *4 (S.D. Fla. May 8, 2012) (agreeing with the insurer “that it owes no coverage for costs related to matching or uniformity” because the policy covered only “‘direct physical loss of or damage’ to the covered property” and there was no provision showing the insured’s “entitlement to matching of undamaged property to newly-repaired property”); Ocean View Towers Ass’n, Inc. v. QBE Ins. Corp., No. 11-60447-Civ., 2011 WL 6754063, at *10 (S.D. Fla. Dec. 22, 2011) (granting summary judgment to the insurer on the ground that the policy “provides coverage only for ‘direct physical loss or damage’ and does not cover the replacement of undamaged property to ensure ‘matching’”); Weiler v. Union Ins. Co., No. A-05-454, 2006 WL 2403935, at *2 (Neb. Ct. App. Aug. 22, 2006) (holding that a policy providing coverage for “physical loss to property” obligated the insurer to “pay to replace only the siding damaged by hail”); Vazquez v Citizens Property Ins. Corp., No. 2016-002262-CA-01, 2017 WL 9250268, at *2 (Fla. Cir. Ct. Oct. 30, 2017) (ruling on evidentiary motion in limine; “The Court agrees that matching is something other than direct physical loss.”).

[11] Ross v. Hartford Lloyd Ins. Co., No. 4:18-cv-00541-O, 2019 WL 2929761, at *7-8 (N.D. Tex. July 4, 2019).

[12] Id. at *7 (quoting 10A Couch on Insurance § 148:46 (3d ed. 2010)).

[13] Woods Apts., LLC v. U.S. Fire Ins. Co., No. 3:11-CV-00041-H, 2013 WL 3929706, at *2 (W.D. Ky. July 29, 2013); see also id. (“Essentially, if [the insurer] can repair the damaged area with comparable or similar material, the Policy provides that they are not obligated to replace undamaged portions.”).

[14] Id. (noting that the insureds had failed to “proffer[] any evidence of the unavailability of comparable or similar material, such that [the insurer may] repair only the damaged portions of the Property without affecting the aesthetic integrity of the Property”).

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