The Cosmetic Endorsement in Property Insurance Policies: Beauty is a Beast

hail metal roofThe hail storms last spring in Dallas, Fort Worth, Wylie, Richardson, Plano, Rockwall, Garland, Rowlett, Allen, Mesquite and Lewisville have brought to light a little known endorsement in many Texas property insurance policies – the cosmetic endorsement.

The endorsement usually reads:

COSMETIC ROOF DAMAGE.

We do not cover cosmetic loss or damage caused by or resulting from hail to metal, slate or tile roofs. Cosmetic loss or damage means only damage that alters the physical appearance of the roof or any of its components but does not result in damage that allows the penetration of water through the roof covering or otherwise result in the failure of the roof covering to perform its intended function of keeping out the elements over an extended period of time. 

Another endorsement might read:

“Cosmetic loss or damage” means only that damage that alters the physical appearance of the “metal roof covering” but does not allow the penetration of water or moisture through the “metal roof covering” or does not result in the failure of the “metal roof covering” to perform its intended function to keep out water and moisture for the remainder of its anticipated useful service life.

To be polite, this is a bullshit exclusion.

First, the definition of functionality is vague. A hail strike that does not currently cause a penetration may very well compromise the long term functionality of the roof. For example, damage to a seam on a metal roof may lead to an inability to shed water in a very short period of time. In any event, it may be necessary to find an engineer to analyze the issue of functionality.

Second, the endorsement puts the property owner with a hail damaged roof in an impossible situation regarding future claims. For example, if a claim is denied based on the cosmetic exclusion, what happens when the property owner makes a claim a few years later? Will that claim be denied on a wear and tear or prior damage exclusion?

Third, this endorsement will bring agents into the fray. Many agents aren’t aware that these endorsements have crept into the policy and even when they are aware they have not adequately explained the issue to their customer. This could lead to an E/O claim against the agent.

A thorough examination of the roof should be conducted. I am aware of at least one expert who can test the structural integrity of a metal roof with a chemical solution to determine whether there is damage to the functionality or to the long term service life of the roof.

Do not take the word of the insurance adjuster. The majority of the insurance adjusters will invoke the cosmetic endorsement on a metal roof without even looking to see whether there is more extensive damage.

As a practical matter, it will be difficult to get any kind of coverage later for a roof that has any hail damage-even if it is “just” cosmetic.

If you are running into issues with a cosmetic endorsement you should call Hoch Law Firm, P.C. at 1-800-828-5160. We will review your Policy and, if necessary, provide the expert analysis to determine whether you have a valid claim.