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January 29, 2015  

 
 Q&A of the Week

New Owner of Old Condominium with Improvements and Betterments

A Ohio subscriber recently asked the following question:

When a condo owner makes improvements to the condo, for example new kitchen cabinets, and later sells the condo, are the cabinets still betterments and improvements for the new owner who purchases the condo?


ANSWER: The condo policy does not define "improvements and betterments." The policy provides coverage for betterments and alterations. While the new owner did not make the alterations, they are still alterations all the same. Also, the state statutes determine whether the unit owner or the condo association is responsible for appliances and cabinets. In our opinion the alterations still count as alterations under the new owner and should be insured as such.
 Read More

 
 What's New This Week in FC&S
Drones
Drones are the latest new technology to catch the headlines. They are unmanned aircraft, often compared to model aircraft, but have been used in search and rescue, firefighting, surveillance, traffic monitoring, and other functions. Like any new technology, drones bring with them a host of insurance issues. Read More
 
 Litigation Watch
Replacement of Damaged Property

A dispute arose between the insurer and the insured as to whether the policy language providing for the replacement of damaged property with property of comparable material and quality required the replacement of undamaged siding in order to provide a color match. This case is Cedar Bluff Townhome Condominium Ass'n v. American Family Mut. Ins. Co. No. A13-0124, 2014 WL 7156914 (Minn. Dec. 17, 2014).

During a hail storm, Cedar Bluff's buildings sustained some damage. Roofs were damaged and at least one siding panel on each building sustained damage. The siding was about eleven years old and the color of the panels had faded. Replacement panels were available from the same manufacturer but the panels were not available in the same color.

Cedar Bluff, the insured, submitted a claim. The insurer, American Family, did not dispute that the hail storm damaged the panels. A dispute did arise regarding the value of the loss. Cedar Bluff argued that all of the siding on each building had to be replaced because there would be a color mismatch with the existing panels if only the damaged siding panels were replaced. American Family offered to pay for replacement panels that were either slightly darker or slightly lighter in color than the original panels.

The insured demanded an appraisal, and the appraisal panel found that the original siding of the buildings could be matched in terms of model name, texture, size, and installation, but could not be matched in terms of color. The panel determined the award for total replacement of the siding was $361,108. The insurer refused to pay the appraisal award. The insured sued and the trial court ruled in favor of the insurer. A court of appeals reversed and the dispute went to the Supreme Court of Minnesota. Read More

   
 FC&S Ask the Experts
Did you realize that the Q&A section of FC&S is made up of questions submitted by subscribers like you?

Paid subscribers to FC&S Online or print FC&S Bulletins are invited to submit insurance coverage questions to the editors. We'll provide a personalized opinion within five business days. (We'll let you know if it will be longer than that. Sometimes we have to gather research or other supporting materials).

Who knows? Your question may be featured (anonymously) in the online Q&A of the Week or as an FC&S update.

Submit your coverage interpretation question right to the editors of FC&S for quick and reliable information. Ask our expert staff a question by clicking here.
 
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FC&S editors regularly conduct web-based demos of the service. Feel free to contact Christine Barlow, cbarlow@ SummitProNets.com, to set one up! They only take 30 minutes, a small investment of time that will help you learn all that FC&S Online has to offer.
 
 Contact Us
As always, your comments and questions are welcome.

Contact us at:
FC&S Department
Phone: 800-543-0874
Fax: 859-692-2293
Email: eAlerts@nuco.com
The Zalma Insurance Claims Library
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Construction Defects Coverage Guide
Your single-source for identifying, insuring, investigating, prosecuting, and defending cases that result from construction defect claims. More Info
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FC&S Team
Kelly Maheu, J.D.
Publisher
  Diane W. Richardson, CPCU
Consulting Editor
Christine G. Barlow, CPCU
Managing Editor, FC&S
  Diana B. Reitz, CPCU, AAI
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David D. Thamann, J.D., CPCU, ARM
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  Katherine S. Caudill, J.D.
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  Emily Brunner
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  Tosha Brinkman
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Barry Zalma, Esq., CFE
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  Donna Cozatchy
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