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Utah Matching Laws

Does your Insurance owe for matching in Utah?- This is a hot topic with Insurance Companies and Policy Holders. I am going to try an address the issues and the Utah State laws  surrounding it. The insurance companies state that they only owe for direct physical loss. The key word here is loss. Loss according to the American Institute for Chartered Property Casualty Underwriters (AICPCU) instructs us that this is a reference to the financial loss of the policy holder.

AICPCU- Property Loss Adjusting 3rd Edition. Page 1.4
An insurance policy is a contract of indemnity. It is designed to restore an insured who has suffered a loss to the same financial condition as before the loss.

Contract of indemnity- A contract under which the insured is entitled to payment only if he or she has suffered a covered loss and then only up to the extent of the financial loss actually suffered.

So what does this have to do with matching?

When an insurer determines if there is damage from a covered peril they owe to replace or repair that item to indemnify or make the policy holder financially whole. If they are not made financially whole then the insurer did not properly indemnify the policy holder.

Example #1

The policy holder suffered water damage to their laminate wood flooring, the flooring is 10 years old faded and worn. The policy should pay to replace the floor and any other consequential damages, even though the entire floor was not destroyed only a small section. This is because replacing only a small portion of the floor would not look the same as the older floor. In order to properly indemnify the policy holder the floor needs to have a uniform appearance as to not de-value the home with a miss matched floor.

Example #2

The policy holder has wind damage to their roof. The roof is 15 years old, has granular loss on the shingles and are very faded. The shingles likely could not be repaired due to brittleness but less say the insurer says that they can repair the shingles. If your roofing contractor brought shingles that were the exact same as the ones you had you would still have a miss matched roof. When you go to sell this house with the miss matched shingles you would have to discount the house in price because your roof is mismatched. The insurance company has not properly made you whole from your financial loss.

The State of Utah Addressed this issue in recent legislation

R590-190-13. Standards for Prompt, Fair and Equitable Settlements Applicable to Fire and Extended Coverage Type Policies with Replacement Cost Coverage.
(1) Replacement Cost Value:
When the policy provides for the adjustment and settlement of first party losses based on replacement cost, the following shall apply:

(a) when a loss requires repair or replacement of an item or part, any consequential physical damage incurred in making such repair or replacements not otherwise excluded by the policy, shall be included in the loss. The insured is only responsible for the applicable deductible; and

(b) when a loss requires replacement or repair of items and the repaired or replaced items do not match in color, texture, or size, the insurer shall repair or replace items so as to conform to a reasonably uniform appearance. This applies to interior and exterior losses. The insured is only responsible for the applicable deductible.

These laws are quite clear that a damaged item covered by an insured event shall be repaired or replaced with a reasonably uniformed appearance. In other words does the differences in color devalue the property. Reasonable does not mean the shingles were once brown so we will use a brown shingle to repair even though the shingles are more of a white and black fiberglass color.

Rutgers Law Professor Jay Feinman was commissioned by United Policyholders to write a report on the issue of "matching" following property losses to residential structures. He summarized the issue of matching as following:

Disputes can arise under a replacement cost policy if property is partially damaged. The insurer asserts that it is only required to pay for repair or replacement of the limited portion of the property that is damaged. The policyholder claims that more is needed to replace the property to a condition comparable to the position it was in prior to loss. A typical example arises if a portion of a roof is damaged. Replacing only the damaged shingles restores the functionality of the roof but does not fully replace the damaged property because the new shingles do not match the existing shingles. Prior to the loss the roof had a uniform appearance, and uniformity has a significant effect on value; therefore, the proper measure of replacement cost is the cost to replace the entire roof to restore the uniform appearance. This is the issue of “matching”— matching the damaged part of the property to the undamaged part to restore the property to the condition prior to loss, such as a roof with uniform appearance.


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