Insurer Ordered to Replace All Siding On Partially Damaged Condos

August 20, 2019

The Seventh Circuit Court of Appeals based in Chicago recently ordered Philadelphia Insurance Company to pay to replace all of the siding on dozens of condominium buildings because there was no longer a match available for the undamaged siding. Winbridge of Naperville Condominium Association v. Philadelphia Indemnity Ins. Co., 18-2103 (7th Cir. August 7, 2019).  In May 2014, a hail and windstorm damaged a number of condominium buildings owned by Winbridge of Naperville Condominium Association in Illinois.  The storm caused physical damage to the aluminum siding on the west and south sides of the buildings but there was no damage to the east and north sides.

Philadelphia issued a replacement cost property policy to the condominium association.  The condo association argued that because replacement siding that matches all of the sides of the building was no longer available, Philadelphia was required to replace all four sides of the buildings.  Philadelphia countered by arguing that it was only obligated under its policy to replace those sides of the buildings that were physically damaged.

The Seventh Circuit sided with the condo association and found that Philadelphia must pay to return the buildings to their pre-storm status, i.e., with matching siding on all sides.  According to the court, the condo association only sought “to be put back in the position it was in before the storm.  Having mismatched siding on the buildings would not be the same position.”

So called “matching issues” have been addressed by lower courts but this was the first time the Seventh Circuit Court of Appeals weighed in on the issue.  This is certainly a victory for policyholders.  The ruling should be relied on by a number of insureds, especially those in Wisconsin, who experience similar losses under replacement cost policies.  Some insurance companies have started to rewrite their policies to limit and exclude matching in an effort to avoid court rulings such as this decision.  Going forward, the legal question in such cases will likely turn on whether a replacement cost policy that does not allow the insured to return to pre-storm status will be enforceable.

For more information about "Insurer Ordered to Replace All Siding On Partially Damaged Condos," contact Justin H. Lessner at jlessner@axley.com or 608.283.6761.