Texas Wind and Hail Damage: Does Like Kind and Quality Include More Expensive? A Guide to Appraisal

“Mex-Tex’s roofing contractor and its expert at trial both testified that the old and new roofs were comparable. The only evidence to the contrary was the difference in cost. In these circumstances, the trial court could find that Republic breached the policy by refusing to pay the cost of the new roof.” Republic Underwriters ins. v. Mex-Tex, Inc., 150 S.W.3d 423, 425 (Tex. 2004).

In Mex-Tex, Inc., the policy required the insurer to ‘repair, rebuild or replace the property with other property of like kind and quality’. The commercial property sustained hail damage to its ballast roof. Instead of replacing the roof with one attached by ballast (rocks), the owner put on a roof that was affixed to the building mechanically. Mechanically securing the roof cost more than the ballast system. The insurer refused to pay more than the cost of installing an ‘identical’ roof (the cheaper ballast roof). The Texas Supreme Court noted the insurer was required to pay the cost of replacing damaged property with property ‘of comparable material and quality.’ Comparable material and quality has ‘leeway,’ sufficient to require the insurer to pay the additional costs.

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