Roof Damage Insurance Disputes Resolved
Post 4836
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Roof damage insurance disputes are common. April Point South Property Owner’s Association, claims that the insurer, Third Coast Insurance Company, owes over $1.8 million to repair hailstorm damage to 31 separate buildings in a condominium project. Third Coast investigated the claim and denied coverage. April Point disputed the denial. Both parties retained adjusters and experts. After the parties failed to reach resolution, April Point sued.
In April Point South Property Owner’s Association, Inc v. Third Coast Insurance Co., Civil Action No. H-23-2654, United States District Court, S.D. Texas, Houston Division (July 15, 2024) the USDC resolved competing motions for summary judgment.
ANALYSIS
Third Coast did not pay anything under the policy in the year after the storm damage. April Point has presented evidence that Third Coast’s coverage denial deprived April Point of the funds it needed to make the repairs. Although April Point may recover on a replacement cost value despite the one-year deadline, subject to the limitations discussed below, April Point must make the repairs in order to obtain coverage on a replacement value basis.
The Age of the Roofs
Third Coast also argues that April Point can recover no more than the actual cash value of the repairs because the damaged roofs are over 15 years old. The policy states that “[a]ny damage to existing roof coverings that have been in place . . . for more than fifteen (15) years and one (1) day will be valued at ‘Actual Cash Value[.]’”
April Point asserts that that it can show that at least two roofs were replaced within the 15 years before the date of loss and therefore qualify for replacement cost value. Third Coast responds that while it does not dispute that 4,400 square feet of the damaged roofs are less than 15 years old, April Point has not shown that the other 186,400 square feet of the roofs are under 15 years old. The court agreed.
Coverage for Cosmetic Damage
The policy excludes payment for “cosmetic loss or damage” which it defines as damage “that alters only the physical appearance of any such item . . . but does not result in the failure of the item to perform its intended function for the remain[d]er of its original, useful life.” The parties agree that cosmetic work is not covered. April Point may not seek cosmetic damages to replace dented but functional parts of the property.
Replacement Cost as of the Date of Loss
The policy provision limiting Third Coast’s obligation to pay repair costs to the prices at the date of loss is unambiguous. Third Coast is entitled to summary judgment limiting the damages to the costs of repair as of the date and place of loss.
The Exclusion of General Contractor Overhead and Profit
The Third Coast insurance policy excludes recovery of “General Contract Overhead and Profit” for the “roof system or any component thereof[.]” Since neither party has submitted or pointed to evidence as to whether the “roof system or any component thereof” includes HVAC units or lattice work the court denied summary judgment because, while the policy excludes recovery for the general contractor’s overhead and profit for the “roof system or any component thereof,” the present record does not show what costs or work this policy language excludes.
The Exclusion of Loss from the Diminution of Value
The insurance policy states that Third Coast “will not pay for loss to Covered Property due to any ‘Diminution in Value[.]’” April Point may not recover damages for diminution of market value based on the appearance of the roofs after repair as opposed to replacement.
The Extracontractual Claims
Texas law imposes on insurers a common law duty to deal fairly and in good faith with its insured in the processing and payment of claims. The record shows that Third Coast’s inspector initially reported evidence of hail damage to the property and recommended payment of the claim. After the initial investigation, Third Coast brought in independent engineering and weather consultants who disagreed with the inspector’s determination. April Point has not submitted or pointed to evidence that these consultants made their findings in an unobjective or unfair matter. A bona fide controversy is sufficient reason for failure of an insurer to make a prompt payment of a loss claim. The evidence shows a bona fide controversy between various experts as to whether the damage was covered, precluding liability for bad faith. The extracontractual claims were dismissed.
CONCLUSION
Third Coast’s motion for partial summary judgment was granted to limit recovery to the actual cash value for roofs except the 4,400 square feet that were less than 15 years old and to the costs of repair as of the date of loss, and to exclude coverage for diminution of value and repair of cosmetic damage. The court also granted summary judgment on the extracontractual claims. Third Coast’s motion was denied as to the work covered by the general contractor overhead provision. The court granted summary judgment that the policy excluded coverage for cosmetic damage and diminution of value.
ZALMA OPINION
Insurance policies that contain provisions that are clear and unambiguous will always be affirmed and applied by a trial court. This court worked for fairness applying some of the insured’s arguments and applied some of the insurer’s position. Importantly it rejected the bad faith claim because the insurer’s position was fairly debatable.
(c) 2024 Barry Zalma & ClaimSchool, Inc.
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Happy Law Day
ZIFL – Volume 30, Issue 9 – May 1, 2026
Read the full article at https://www.linkedin.com/pulse/zalmas-insurance-fraud-letter-may-1-2026-barry-zalma-esq-cfe-2tywc, see the video at at and at https://zalma.com/blog plus more than 5300 posts.
THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL
ZIFL – Volume 30, Issue 9 – May 1, 2026
Zalma’s Insurance Fraud Letter (ZIFL) continues its 30th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year and is written by Barry Zalma.
DOJ Creates National Fraud Enforcement Division
Will the Feds Take on Insurance Fraud? Possibly as Part of a National Anti-Fraud Effort
On April 7, 2026, the Acting Attorney General, Todd Blanche, issued a memorandum establishing the Department of Justice National Fraud Enforcement Division (NFED). The memo describes an ambitious, but perhaps redundant, vision for this ...
When Abalone Died As a Result of Multiple Causes The Efficient Proximate Cause Requires Payment
Post number 5345
Read the full article at https://www.linkedin.com/pulse/efficient-proximate-cause-doctrine-saves-claim-barry-zalma-esq-cfe-yndlc, see the video at and at and at https://zalma.com/blog plus more than 5300 posts.
In American Abalone Farms, LLC v. Star Insurance Company et al., H052643, California Court of Appeals, Sixth District (April 27, 2026) the Court of Appeals dealt with an insurance coverage issue that required application of the efficient proximate cause doctrine.
FACTS
American Abalone Farms, LLC ("American Abalone" ) operates an aquaculture farm in Santa Cruz County, California, raising abalone in tanks. In August 2020, the CZU Lightning Complex Fires led to a prolonged power outage and road closures near the farm. As a result, the farm’s water pumps failed, causing the death of most of the ...
Breach of a Specific Condition Precedent Is a Complete Defense
See the video at and at and at https://zalma.com/blog plus more than 5300 posts.
In United Services Automobile Association and State Farm Mutual Automobile Insurance Company v. Anthony Wenzell, 2026 CO 25 (Colo. Apr. 27, 2026) Anthony Wenzell was rear-ended in a car accident. He had a significant prior 2014 accident that required back surgery.
Wenzell claimed underinsured-motorist (UIM) benefits under three policies: (1) the tortfeasor’s liability policy, (2) his own primary UIM policy with State Farm, and (3) an excess UIM policy issued by USAA (under his brother’s policy, which contained an “other insurance” clause making USAA’s coverage excess over any collectible insurance).
After receiving the claims, both USAA and State Farm repeatedly requested that Wenzell execute comprehensive medical-release authorizations so they could obtain his full medical records and ...
It is Fraud to Make the Same Claim Twice
Read the full article at https://www.linkedin.com/pulse/fraud-make-same-claim-twice-barry-zalma-esq-cfe-c4g8c and at https://zalma.com/blog.
Chutzpah: After Being Paid for a New Roof Insured Makes Second Claim For Same Damages
Post number 5347
No One is Entitled to be Paid for the Same Loss Twice
In Mohammed Ali Khalili v. State Farm Lloyds, No. 14-25-00611-CV, Court of Appeals of Texas (April 30, 2026) Khalili maintained a State Farm Lloyds homeowners insurance policy for decades. In 2008 he filed a roof-damage claim; State Farm paid him to replace the entire roof (shingles and gutters). Khalili never replaced the roof and repeated his claim.
BACKGROUND
In 2021 he filed a second roof claim. State Farm’s inspectors found the roof “very old” with extensive non-storm-related damage. The claim was denied because (1) the damage did not exceed the deductible and (2) State Farm had already paid for a full roof replacement.
PROCEDURAL HISTORY
State Farm filed motion for summary...
It is Fraud to Make the Same Claim Twice
Read the full article at https://www.linkedin.com/pulse/fraud-make-same-claim-twice-barry-zalma-esq-cfe-c4g8c and at https://zalma.com/blog.
Chutzpah: After Being Paid for a New Roof Insured Makes Second Claim For Same Damages
Post number 5347
No One is Entitled to be Paid for the Same Loss Twice
In Mohammed Ali Khalili v. State Farm Lloyds, No. 14-25-00611-CV, Court of Appeals of Texas (April 30, 2026) Khalili maintained a State Farm Lloyds homeowners insurance policy for decades. In 2008 he filed a roof-damage claim; State Farm paid him to replace the entire roof (shingles and gutters). Khalili never replaced the roof and repeated his claim.
BACKGROUND
In 2021 he filed a second roof claim. State Farm’s inspectors found the roof “very old” with extensive non-storm-related damage. The claim was denied because (1) the damage did not exceed the deductible and (2) State Farm had already paid for a full roof replacement.
PROCEDURAL HISTORY
State Farm filed motion for summary...
What Must be Done after Notice of a Claim is Received by the Insurer
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A first party property policy does not insure property: it insures a person, partnership, corporation or other entity against the risk of loss of the property. Before an insured can make a claim for indemnity under a policy of first party property insurance the insured must prove that there was damage to property the risk of loss of which was insured by the policy. The obligation imposed on the insured ...
