MNAES Board and Lobbyist Meet with Senator Vicki Jensen – Owatonna, MN
The Board and our Lobbyist Lisa Frenette, met with Senator Vicki Jensen from Owatanna to discuss our Bill and the upcoming legislative session. Senator Jensen has been a supporter of the MNAES for several years now and is a great voice to have in our corner at the Capitol. Read the legislative update below for more information.
MNAES Legislative Updatesubmitted by: Lisa Frenette – MNAES Lobbyist
The MNAES wound up the 2015 legislative session successfully! We defeated a bill that would have required a contractor to pay attorney’s fees had they been successfully sued by a home owner on a warranty issue. We also passed legislation moving building codes from a three year update to six year update. The caveat is a portion of the code may be updated if it is for public safety or the health and welfare of Minnesotan’s. Over the past few months, the MNAES has been meeting with key members of the House and Senate Commerce committees to update them on continuing issues with the insurance industry. These legislative members include members of the Senate Subcommittee on Insurance – Senator Jensen (D-Owatonna) and Senator Gazelka (R-Brainerd) as well as key Commerce committee members in the House – Representative Hoppe (R-Chanhassen) and Representative Atkins (D-Inver Grove Heights). These four members are key to moving objectives of the MNAES forward. Several new issues have been brought to the Board’s attention including insurance companies now requiring contractors to submit all of their invoices with sub-contractor invoices un-redacted. Besides being a business to business private contract this essentially a breach in trust between you and your sub. These issues have piqued the curiosity of the legislative members and we will continue to give them more information as we move into developing the 2016 legislative agenda. Please feel free contact Lisa Frenette if you have an issue you’d like to discuss at firstname.lastname@example.org Lisa Frenette
Important News on the Limited Matching Endorsement
Submitted by: Edward Beckmann – Hellmuth & Johnson, PLLC
American Family is announcing its new endorsement to exclude any matching of material not directly hit by a storm. American Family has pushed the envelope once again. I think it’s time for an update on where we stand with the limited matching endorsement. I believe, though I do not know with certainty, that the limited matching endorsement is a reaction to the Cedar Bluff v. American Family case. It is issued around the time Cedar Bluff is moving through the courts. In any event, the limited matching endorsement is an end-run around Cedar Bluff. Cedar Bluff interprets American Family’s policy as it existed a few years ago. American Family was always free to simply change its policy, and it did. The limited matching endorsement is that change. The first attachment to this e-mail is a limited matching endorsement apparently written in March 2013. See the form number “END. 535 Ed. 3/13” in the lower left corner of the document. The second attachment to this e-mail is the 2015 endorsement. The 2015 endorsement clarifies that there is no coverage of undamaged property in the absence of a specific purchase of a limited matching endorsement. The 2015 endorsement is not limited to siding, rather it applies to all undamaged material. As I have said to many of you, the 2013 endorsement is amazing. It does not apply to cover a mismatch due to a) weather, b) fading, c) oxidizing, or d) wear and tear. Well, nearly all siding and shingles on property has faded after a few years. What is weathered, anyway? Talk about subjective. It seems to me a huge percentage of insureds are buying no coverage under the 2013 endorsement. Of course, there is a dollar limit too. Under the main policy, there is no dollar limit for coverage of undamaged material other than the declarations, but with this endorsement it is capped at $20,000. The 2015 exclusion endorsement is even more amazing. Here is the beginning of the appraisal clause: “This [appraisal] applies after we confirm that the damage due to a loss is covered.” American Family thinks it can decide whether there is coverage, and only then does the insured have a right to appraisal. No way. Minnesota statute writes this clause. Minn. Stat. Sec. 65A.01 subd. 3. Any insurance policy that covers fire or lightening has to be written consistent with this clause or courts will reform it to match the statute. Watson v. United Services Auto Assoc., 566 N.W.2d 683, 691 (Minn. 1997). Under the statute, an insured is entitled to appraisal when the scope of the loss is in dispute, including causation. The insurer is not privileged to “confirm that the damage due to a loss is covered” before appraisal. American Family thinks it can now assess what caused the damage, and if its opinion is the cause is not covered, the insured has no right to appraisal. That just ain’t so under the statute. Property owners and their advocates can never accept the legitimacy of this form. This is a violation of state law and an end-run around the statutorily guaranteed right to appraisal. NOT ALL ENDORSEMENTS ARE THE SAME I have also attached a limited matching endorsement from Farmers. This endorsement stands for the important principle that not all insurance companies issue the same endorsement. It always pays to check the policy. When you compare American Family’s 2013 endorsement and Farmer’s endorsement (apparently written in 2012), notice the Farmers endorsement does not refer to weathering, fading, oxidizing, etc. That’s helpful. I think the coverage in Farmer’s policy is broader than American Family’s, and that’s helpful for property owners. DOES MINN. STAT. § 65A.01 ALLOW ANY LIMITED MATCHING ENDORSEMENTS? Of course, as regular readers of my e-mails know, I think any limited matching endorsement is a violation of statute. Minn. Stat. Sec. 65A.01 subd. 3. The valuation clause in that statute ought to control. That valuation clause is simple: what is the value of “damage” and “loss” before and after the fire or storm. That’s it. Very simple. A “loss” has to be something less than direct “damage” or a “loss” is redundant. Of course, it is not redundant. A “loss” can be something less than material that received a direct hit, and that includes property less valuable because it no longer matches nearby replacement material (siding, shingles, etc.). I can’t wait to challenge all of these endorsements. I think they violate state statute. The new appraisal clause in American Family’s policy is particularly outrageous, and I for one will never counsel a property owner to accept its applicability to any loss.
Revisiting Cedar BluffSubmitted by: Tim Johnson, Roeder Smith Jadin, PLLC Last December in Cedar Bluff v. American Family, the Minnesota Supreme Court held that insurance policies which provide “like kind and quality” replacement coverage include coverage for the cost of replacing damaged materials with a reasonable matching material. The Court also held that whether a replacement material constitutes a reasonable match was a decision that an appraisal panel could consider. While the Cedar Bluff case related to matching siding, the decision applies to virtually any building component that a homeowner would reasonably expect to maintain in a consistent or uniform appearance. Over the summer, countless appraisal panels applied this decision to find that material matching required replacement of windows, siding, and roofing. The test of whether a material match is reasonable is subjective, but panels have relied on whether the product was available or discontinued, ITEL reports, and the “eye test” by visually comparing replacement materials against the existing materials. It is important to recognize that material matching is not mandatory for every insurance restoration project in Minnesota. Rather, material matching is only available where the insurance policy covers it. Some insurance policies even have specific exclusions for material matching. If an insurance adjuster claims a policy does not provide matching, homeowners should request that information in writing. If the insurance company denies that a policy covers matching, contractors should advise their customers to reach out to a public adjuster or attorney to review the policy. As most contractors are aware, the Department of Labor and Industry’s 2010-4 Bulletin prohibits contractors from advising homeowners about insurance coverage. The good news is that the debate over material matching does not normally have to do with whether the policy provides it. Most often the question is merely whether a suitable matching replacement material exists. This can sometimes be resolved through a second adjustment comparing the proposed replacement against the existing material. If this is unsuccessful, the homeowner can now have that debate resolved through an inexpensive insurance appraisal rather than a lengthy Court proceeding. The Cedar Bluff case decided a long-contested debate in insurance restoration work. Now, rightful matching claims are being paid routinely without the burden of going to Court or an insurance appraisal. For highly contested matching claims, the appraisal process allows homeowners a cheaper and quicker alternative to have their claims resolved.