Texas Hail Damage or Poor Roof Workmanship?

In State Farm Lloyds v. Hanson, a Texas appellate court considered State Farm Lloyds’ appeal from a judgment in favor of its insured. The case arose when a woman closed on a house that had a 15-year-old roof. The roof shingles were 30 years old and fastened with staples. During the building inspection, there were no concerns stated about the roof. The woman requested coverage through her State Farm agent, who prepared an underwriting report. In the report, there was nothing reflected about rotting, hail damage, or interior leaks. Nothing was stated as a point of concern.

The homeowners’ policy that was issued by the defendant provided coverage for accidental physical losses to the property. It excluded certain losses arising out of weaknesses in workmanship. In June 2012, there was a huge storm. The next day, a roofing company salesman made adjustor appointments for houses in the woman’s neighborhood. In October, he inspected the woman’s roof, found areas where shingles were not sealed to lower layers, and suggested she file an insurance claim.

She and the salesman both called in a claim for wind damage to the roof. The claims representative came with the roofing salesman to check out the roof. He found there wasn’t enough damage, and no covered loss had been sustained. The woman was unsatisfied and asked for another inspection. This inspector also found no covered loss, and the claim for wind damage was denied.

The woman sued State Farm and one of the inspectors, claiming breach of contract and violation of Tex. Ins. Code Ann. §§ 542.051-.061 (Prompt Payment of Claims statute). She also claimed bad faith. The defendants made a settlement offer, which she didn’t accept. The case proceeded to trial.

At trial, there was testimony from multiple people that indicated damage to the shingles, including wind-creased shingles, which were covered by the policy. One of the plaintiff’s experts offered the opinion that the roof couldn’t be repaired because there would be more damage to the shingles, and instead the roof needed a replacement. State Farm’s experts agreed that some damage could have been caused by the windstorm. One provided an opinion that the roof had been defectively installed.

The jury was asked whether State Farm had failed to comply with its policy terms. The jury was told the policy wouldn’t cover wear and tear or unsound construction. The jury found that the insurer had failed to comply. It also awarded the plaintiff $12,878 in repair costs, minus the deductible.

State Farm appealed, arguing there was no proof that the roof had experienced a covered physical loss as a result of the 2012 storm. It also argued that the physical losses that may have been sustained were excluded by the policy, and she couldn’t recover replacement costs because she didn’t show she was entitled to them.

The appellate court found that there was evidence to support the trial court’s findings, including evidence the shingles had been sealed before the storm, based on the underwriting report and the seller’s disclosure. State Farm also argued that there was no evidence that a wind event caused the unsealed condition. However, experts had provided testimony about the wind-creased shingles, which were a covered loss. The appellate court noted that the insurer’s own underwriting report didn’t indicate concerns that would reduce coverage related to roof damage. For these and other reasons, the trial court’s judgment was affirmed.

If you have a property insurance claim that you believe has been wrongfully denied or underpaid by an insurer, contact the Hoch Law Firm at 1-800-828-5160 or through our online form.