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Appeals panel nixes insurer's bid to fix only hail-damaged parts of condo building, not siding on all four walls


By Karen Kidd | Aug 22, 2019


CHICAGO — A Texas-based insurance company is on the hook for all four walls of buildings owned by a west suburban Naperville condominium association, not just portions of walls that were damaged in a 2014 storm, a federal court has affirmed.

A U.S. Seventh Circuit Court of Appeals three-judge panel sided with the Windridge of Naperville Condominium Association and affirmed a lower court's ruling that Philadelphia Indemnity Insurance Co., based in Plano, Texas, must pay to replace siding on all four walls of the condo buildings.

In its 16-page decision issued Aug. 7, the appeals court agreed with the lower court that a potential ambiguity existed in Philadelphia Indemnity's policy with Windridge around the phrases "direct physical loss" and "covered property."  The appeals court agreed with the lower court that the buildings as a whole had been damaged and that siding on all four walls would have to be replaced to make the buildings whole again.

U.S. Seventh Circuit Court of Appeals Judge Frank H. Easterbrook | Wikipedia - Contributed by Judge Frank Easterbrook

"Regardless, the unit of covered property to consider under the policy (each panel of siding vs. each side vs. the buildings as a whole) is ambiguous as applied to these facts, so under Illinois law, we favor the interpretation that leads to coverage," the appeals court's decision said.

Seventh Circuit Judge Frank H. Easterbrook wrote the decision. Judges Michael S. Kanne and David F. Hamilton concurred.

The case stems from a May 2014 hail and wind storm that damaged aluminum siding on the south and west sides of buildings owned by Windridge, according to the background portion of the decision.  

Philadelphia Indemnity said it was required under its replacement-cost policy with Woodridge to replace siding only on the damaged sides of the buildings. Woodridge countered that, in order to be made whole, the undamaged sides of the building also would have to be replaced because replacement siding for the undamaged sides was no longer available.

A U.S. District Court judge said the policy provided for a "make-whole" when it granted summary judgment to Woodridge, a decision Philadelphia Indemnity appealed.

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U.S. District Court for the Northern District of IllinoisU.S. Court of Appeals for the Seventh Circuit

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