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A Tokio Marine Group unit must pay to replace all the siding on a condominium association’s buildings, in a case where there was no longer a match available for the structures’ undamaged siding, says a federal appeals court in affirming a lower court’s ruling.
On May 2014, a hail and windstorm damaged buildings owned by the Windridge of Naperville Condominium Association in Naperville, Illinois, according to Wednesday’s ruling by the 7th U.S. Circuit Court of Appeals in Chicago in Windridge of Naperville Condominium Association v. Philadelphia Indemnity Insurance Co.
The storm physically damaged only the aluminum siding on the buildings’ south and west sides. But the association argued that because replacement siding that matches the undamaged north and east elevations was no longer available, its insurer, Tokio Marine unit Philadelphia Indemnity, based in Bala Cynwyd, Pennsylvania, must replace the siding on all four sides of the buildings so all of the siding matched, under its replacement-cost policy.
Philadelphia Indemnity paid $2.1 million to replace the damaged siding, but refused to pay for replacing the remaining, undamaged siding. Windridge filed suit in U.S. District Court in Chicago, which ruled in the association’s favor.
Its ruling was affirmed by a unanimous three-judge appeals court panel. “The district court’s conclusion that the buildings as a whole were damaged — and that all of the siding must be replaced to ensure matching — is a sensible construction of the policy language as applied to these facts.
“Philadelphia Indemnity’s interpretation — pay to replace only the specific panels of siding that were directly hit by hail, leading to two-tone buildings — is less reasonable,” said the ruling.
“Regardless, the unit of covered property to consider under the policy (each panel of siding vs. each side vs. the buildings as a whole) is ambiguous as applied to these facts, so under Illinois law, we favor the interpretation that leads to coverage,” said the ruling, in affirming the lower court’s judgment.
Attorneys in the case had no comment.
In October, a federal appeals court ruled in favor of an insurer in a long-running dispute with an apartment complex owner over replacement siding, in another case in which siding could not be matched.
Failing to put an adequate coat of sealant to a building’s exterior, which led to water damage, can be considered an “occurrence” under a commercial general liability policy, says a federal appeals court in ruling that an insurer is obligated to provide a defense in the case.