Minnesota Supreme Court Rules On Hotly Contested Insurance Match Issue

Today, the Minnesota Supreme Court released its opinion on Cedar Bluff Townhome Condominium Assoc. v. American Family Mutual Insurance Company, a decision critical to first party insurance coverage both in terms of appraisals and the hotly contested issue of matching.

In affirming the Minnesota Court of Appeals’ decision, the Supreme Court ruled that the appraisal panel correctly determined that the replacement of some storm-damaged siding panels with siding of comparable material and quality required replacement of all of the siding on each of the 20 buildings in order to achieve a reasonable color match.

The Court determined that the phrase “comparable material and quality” in the insurance policy language means “a reasonable color match between new and existing siding” and concluded that “on the spectrum of resemblance, ‘comparable material and quality’ requires something less than an identical color match, but a reasonable color match nonetheless.”

The Court further determined that “color mismatch constitutes ‘direct physical loss of or damage to Covered Property’”. In the case at bar, the covered property, i.e. Cedar Bluff’s buildings, sustained a “distinct, demonstrable, and physical alteration” because the color mismatch resulted from the inability to replace hail-damaged siding panels with siding of “comparable material and quality”, meaning siding panels that reasonably matched.

Finally, the Court determined that the appraisal panel applied the correct legal standard because the appraisal record was replete with references to the words “reasonable match”. The appraisal panel’s decision regarding the issue of matching was, therefore, upheld.

Sauro & Alton PLLC authored an amicus brief for the appeal on behalf of the Minnesota Association of Public Insurance Adjusters.

To read the full decision, click here:  Order – Cedar Bluff Townhome Condominium Assoc. v. American Family Mutual Insurance Company