# Sent to Insurance Commissioners of MN and IN



## larryb (Jul 22, 2010)

Dear Mr. Rothman,

_A former state insurance commissioner once said; "For too long the insurance industry has regulated the insurance commissioner. We've had enough industry lapdogs; it's time for a watchdog."_

On behalf of my organization and it's members as well as myself, I wanted to express my concerns over a number of issues that I believe have had, are having and will continue to have a deleterious effect on Property & Casualty insurance purchasers in this and other states if not addressed. My first concern is with the following:

The relatively recent American Family Insurance match endorsement. In spite of the 2000 Minnesota / Hennepin County District Court ruling that ordered American Family to replace damaged materials that were no longer available http://www.povertylaw.org/poverty-law-library/case/53500/53566/53566a.pdf American Family Insurance decided in 2009 to "offer" a new match endorsement that would, when the insured paid an additional $30 endorsement premium, cover up to $20,000 to pay for replacement of items that were undamaged if the damaged items/materials were no longer available which would have resulted in a miss-match. 

Part of the problem with the endorsement is that far too many new and existing American Family insurance customers were not well informed about the endorsement. Some who were informed exercised their option to not pay the additional premium and were/are therefore not entitled to what the endorsement offered - except for the fact that the referenced 2000 court ruling demands that American Family cover the match cost anyway. Others probably simply opened their latest policy and didn't see any need to look for changes in policy language. Still others, as far as I can tell, were not adequately informed of the "match" endorsement option by their agents, if they were even informed at all. In regards to any agents failure to inform, that's also an E&O issue for them.

Back to the 2000 court ruling; the court ruling was clear and therefore, American Family's "match" endorsement was unfair, improper and in opposition to the court ruling. Keeping in mind who your predecessor was, Ole' "friend of insurance" Glenn Wilson, Jr. (www.iccoa.com/ipa.htm) it is likely that he was the one who disregarded the 2000 court ruling and signed off on the approval of American Family's new "match" endorsement. 

What makes the endorsement additionally problematic in my mind and in the minds of many others from across the country I have spoken to is how the endorsement is deceptively written to include some materials while excluding others according to no known logical or rational formula or reasoning. The endorsement reads as follows: 

For an additional premium, this policy is amended as follows:

CONDITIONS - SECTION I 

The following condition is added:

Matching of Undamaged Siding and/or Roofing: In the case of damage to siding and/or roofing of the covered dwelling and other structures on the insured premises, we will reimburse you up to $20,000 for the cost you incur to replace undamaged siding (including soffit and fascia) and/or roofing with material of like kind and quality to match those materials that were damaged by a Peril Insured Against.

The coverage applies only if substantially similar siding and/or shingles are no longer available to repair or replace the damaged portion of the damaged covered dwelling and other structures on the insured premises.

The coverage does not apply to mismatches caused by weathering, fading, oxidizing, or wear and tear.

*The siding coverage does not apply to siding material other than vinyl or metal siding. The matching roofing coverage does not apply to roofing material other than architectural (laminated) asphalt shingle or 3-tab shingle roofing.*

The last paragraph is key: Again, pointing out that the 2000 court ruling which AmFam was ordered to abide by and did abide by until January 1, 2010 (many other P&C insurance companies not named in the suit adhered to the ruling as well in Minnesota and other states) the endorsement appears to blatantly violate the court order. What is additionally deceptive is the fact that the last paragraph highlighted in bold which seems to have been written by a first year law student at best improperly omits similar types of roofing for no logical reason. Included in the omission/exclusion are 4-tab and "roll" type asphalt roofing's, among others.

I have talked to members from several states who have told me that AmFam, specifically, has been refusing to pay for full replacement under the match rules (2000 court ruling and/or "Match Endorsement") when an insured has a 4-tab shingle. I've been told that one insurance adjuster said AmFam was refusing to pay for 4-tab replacement because that particular shingle was discontinued years ago (actually in 2005). Although the 4-tab shingle is essentially the exact same product as a 3-tab shingle with an extra tab, match replacement is being denied by AmFam staff and IA adjusters. If both are essentially the same product, it stands to reason that the match rule should also apply to the 4-tab shingles, asphalt roll roofing and similar products.

You'll notice that the endorsement covers all vinyl and metal siding materials, some of which have not been manufactured or available for over forty years but for some reason that defies logic, excludes any roofing that is not architectural or 3-tab (both and 4-tabs are asphalt shingles).
Obviously, at least in my experienced opinion, this is a clear violation of both the 2000 court order and Minnesota bad faith adjustment practices statutes. Likely, the same thing applies in all other states where AmFam has been conducting business in the manner described.

As a side note, many insurance companies are attempting to avoid full match replacement by offering materials for repairs that are usually many years old and warehoused in different parts of the country. These old warehoused siding, roofing and other materials, while they may still be in their original packaging, have become dried and brittle over time and because of their condition are more susceptible to damage when installed and therefore are, in my opinion, insufficient replacement materials.  

This serious "match" issue needs to be addressed post haste so that additional insured's in Minnesota and other states are not further harmed and those that have been harmed by AmFam's unjust attempts to underpay on their claims are made whole.

I will be sharing my concerns with you on related issues over the coming weeks including concerns about the Public Adjuster lobby's (and ABA, NAIC and others) attempts to restrict qualified contractors from advocating on behalf of property owners with insurance covered damage. Some of my concerns regarding this matter are addressed on my website at www.iccoa.com/ipa2.htm. 

In the hope of differentiating the (NAIC) *lapdogs* from the real consumer *watchdogs*, I will also be sharing my concerns with IC's and AG's of all fifty states over the coming weeks and months.

Sincerely,

Larry Burtis, President - Independent Construction Contractors of America
Minneapolis, Minnesota USA

Anxiously awaiting their replies...


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