Texas Department of Insurance
August 10, 1984
TO: ALL PROPERTY AND CASUALTY INSURANCE
COMPANIES
Re: Replacement of Damaged Roofs
with Multiple Overlays of Roof Covering
On June 11, 1993, the Texas Department
of Insurance issued a bulletin to
address replacement of damaged roofs.
The bulletin specifically set forth
the position of the Department regarding
the payment of a claim for a roof
damage loss to include the cost of
the removal of the damaged roof as
part of the covered loss to the roof
caused by an insured peril.
The purpose of this bulletin is
to advise insurers regarding the
settlement of claims for roof damage
and specifically to address the settlement
of claims involving damage to roofs
that may have multiple overlays of
roof coverings, including Composition
shingles overlaid on a wood shingle
roof. A policy of insurance providing
replacement cost coverage requires
damaged property to be repaired or
replaced with material of like kind
and quality and includes the cost
of removing any of the damaged property.
The purpose of insurance coverage
is to make an insured whole again
after a loss. An insurance policy
with replacement east coverage is
a betterment policy because it provides
new replacement material for old
material. A policy of insurance providing
actual cash value coverage also includes
the cost of removing any of the damaged
property and the insured must be
put in the same position as immediately
prior to any loss.
In instances where roof damage occurs
due to a covered cause of loss and
there are multiple overlays of roof
coverings, the cost to remove all
layers of roof coverings is part
of the covered loss, and in accordance
with the valuation clause contained
in the policy, the settlement of
any claim for damage to a roof with
multiple overlays of root coverings
should include the cost to remove
those multiple layers of roof coverings,
If composition shingles have been
overlaid on wood shingles, the covered
loss should include the cost of removing
all layers of roof coverings, including
the wood shingles, and the cost of
redecking the root to allow the application
of a new layer of shingles.
The payment for overlaying one roof
covering over another has been a
practice of insurers in recent years.
Whether the option to overlay was
at the request of the insured or
insurer, insurers enjoyed lower payments
in covered losses through the use
of overlays of roof coverings. It
is unfortunate that a few Insurers
continue to refuse to pay for the
cost to remove multiple layers of
roof coverings that would otherwise
have been covered as part of a loss
had each covering been removed at
the time each loss occurred. Insureds
have a right to be treated fairly
and to deny payment for the removal
of all roof coverings at the time
of a loss is unfair treatment of
insureds and an unfair practice of
insurers.
An insurer's refusal to pay for
the removal of all overlays of mot
coverings when roof damage occurs
may subject the insurer to disciplinary
action pursuant to the Unfair Claim
Settlement Practices Act (Article
21.21-2, Insurance Code). The Texas
Department of Insurance will pursue
alleged violations of the insurance
Code and will take appropriate disciplinary
action, including the requirement
for complete restitution to insureds.
We urge insurers to review their
claims practices to ensure that claims
for damaged roofs are being handled
appropriately.
Yours very truly,
J. Robert Hunter
Commissioner of
Insurance
JRH:LA:mf |
