My roof’s got a hole in it, and I might drown

When scaffolding from a neighbouring building damaged the roof of Wang’s commercial building he lodged an insurance claim for the roof, and rain damaged ceiling tiles and carpet. 

Rex was the only person Wang could find who was prepared to repair the roof.  Rex quoted Wang’s insurance company $8,650 to complete the repair.  Rex was a specialist roof repairer and a member of the Waterproof Membrane Association Incorporated.

The insurance company did not accept Rex’s quote, and asked its insurance assessor for comparative quotes.  One repairer quoted $1,800 and another $1,725.  One repairer said the quote was for insurance purposes only, and he was not prepared to repair the roof for that price. 

Wang discussed the quotes with Rex and was not convinced the proposed repairs were realistic.  Wang agreed to pay Rex $13,500 for a more complete, warranted repair and asked his insurance company to contribute $8,650 towards the repair costs.

Wang’s insurance company considered it was only obliged to return Wang to the position he was in before the damage and offered $1,725 towards the repair costs.  Wang did not accept the offer and complained to FSCL.

 

Wang’s view

In Wang’s view the condition of the roof was irrelevant.  The scaffolding had damaged the roof and Rex had quoted $8,650 to repair it.  If his insurance company accepted the loss was covered, it should pay the cost of replacing the roof to a reasonable standard. 

 

Review

We asked Rex about the condition of the roof, and the repair options.  Rex agreed the roof was nearing the end of its useful life, and would need replacing within the next 6-10 years.  In Rex’s opinion, regardless of the age of the roof, the scaffolding would have caused the same damage, but the age of the roof did limit the repair options available.  Rex also said the other quotes were for a patch repair only, and no reputable roof repairer would be prepared to patch repair the roof.

On our understanding of Rex’s advice, we proposed that the insurance company pay 25% of Rex’s $8,650 quote on the basis that Wang would continue to benefit from the repair work for a further 40 years.  If the roof would have needed replacement after 6-10 years, it seemed fair that this was the extent of the insurance copany’s responsibility.

Wang did not accept our proposal and did not accept the repair would last for a further 40 years.  Wang said Rex’s quote was the cheapest option from the only person who would repair the roof.

We spoke to Rex again.  Rex confirmed the $8,650 quote was the cheapest repair option he was prepared to undertake.  Rex said that the $8,650 quoted repair could have been expected to last between 6-10 years before the entire roof would need either retrofitting or re-roofing.

 

Outcome

Rex’s additional submissions persuaded us that we had over-estimated the on-going value of the roof.  Given the $8,650 quoted repair could be expected to last 6-10 years, and the existing roof may have lasted another 6-10 years anyway, we were no longer satisfied that the $8,650 quote would leave Wang in a substantially better position.  It did not seem fair to deduct any amount from the $8,650 quote and we recommended the insurance company pay Wang the full amount of compensation claimed.

Wang and the insurance company both accepted the recommendation.

 

Our insight

If the roof had been new, or in good repair, determining compensation would have been straightforward.  The insurance company would likely have accepted the roof was irreparably damaged, and replaced it with a new roof.  However, the roof was approaching the end of its useful life and we were initially concerned that requiring the insurance company to pay for a new roof would leave Wang in a much better position than before the damage.

With the benefit of Rex’s expert advice, we were persuaded that the $8,650 repair would leave Wang in substantially the same position as he was before the damage.