Parks recently posted about the new Rules adopted by the Tennessee Commissioner of Insurance that go into effect on October 9, 2017. The first of those rules makes clear the purpose “is to set forth minimum standards for the investigation and disposition of claims.” (Rule 0780-01-05-.01). While there are plenty of items worthy of discussion in the Commissioner’s soon-to-be effective Rules, the one that stood out to me relates to “matching.” Here’s what the Rule says:
When the policy provides for the adjustment and settlement of first party losses based on replacement cost, the following shall apply:
. . .
(b) When a loss requires replacement of items and the replaced items do not match in quality, color or size, the insurer shall replace items so as to confirm to a reasonably uniform appearance according to the applicable policy provisions. This applies to interior and exterior losses. The insured shall not bear any cost over the applicable deductible, if any.
0780-01-05-.10(1)(b). This Rule confirms what I believed was previously already the law in Tennessee and that is that insurers must pay to match. The language adopted by the Commissioner is non-permissive in that it states that insurers “shall” match. As for the statement that matching is required on both interior and exterior losses, that was a good addition due to the fact that many insurers in the past have agreed to pay for matching on the interior but not the exterior. For example, if a 1 x 1 square of sheetrock needs replacing, nearly all carriers will pay to paint the whole wall. In contrast, if several shingles need replacing but can’t be matched, some insurers have taken the position they don’t owe to match. Why the difference between inside and out? I’d venture to say it has a lot to do with the cost – it might be a few hundred bucks to paint that wall but the roof would obviously be much, much more.
One other note concerning the comment to the Rule that Parks mentioned in his post. Specifically, the Commissioner’s “Response to Comment 8” noted that the rule only applies to replacement of items and does not contemplate repairs. In my view, this “clarification” is of no significance on most roof claims. For example, if an existing damaged shingle can be repaired, then there is no matching problem anyway because the existing shingle stays. But if a shingle is blown off or otherwise damaged such that it must be “replaced,” then the matching requirement is mandatory if “there is a deviation in quantity, color, or size of a replacement item.”
All in all, the Commissioner’s new rule should go a long way in confirming that Tennessee is indeed a “matching” state, just as I noted long ago in a prior post.