State fines insurance company over Atlas Chalet shingles

ACWORTH, Ga. - After years of complaints, Georgia's insurance commissioner has finally taken action involving a roofing shingle you may have on your home right now.

An estimated 100,000 houses were built with the Atlas Chalet shingle, a product that was discontinued seven years ago. And that's the problem.

Often, homeowners suffer storm damage to only a portion of their roof. Because the Atlas Chalet is a unique size and are no longer in stock, roofers say the only way to repair the damage is to replace the entire roof. Yet some insurance companies balk at the cost, claiming they should only have to replace the damaged shingles, regardless of whether they can truly be replaced. Homeowners wind up having to pay for the entire roof replacement themselves.

"It just isn't fair," complained Gail Cash. Her home in the Magnolia Cottages neighborhood in Acworth was built with Atlas Chalet shingles. According to her roofer, 27 shingles were damaged by recent storms and need to be replaced. She's already got a leak in her garage.

Her insurance company will only pay to replace the 27 shingles, an amount of money that's lower than her deductible.

“We've never filed a claim," she stressed. "Never. And the time we file it, we don't get anything.”

Roofers like Alberto Mizrahi of WRC Roofing says replacing individual shingles would make the roof look like a checkerboard.

“It's not going to look normal," he explained. “How am I going to warranty my work when I'm only fixing a little patch with a shingle that's not the same shingle?”

In 2015, we brought this conundrum to Georgia insurance commissioner Ralph Hudgens. His answer seemed pretty clear.

“If they have storm damage then the insurance company needs to replace it," he told me then.

The whole roof?

"Yep. I think if they can't match these shingles because they're no longer being manufactured, then I think the insurance company probably ought to go ahead and satisfy the consumer and do the whole roof."

Several roofing companies quickly posted links to his interview on their business website, hopeful that reluctant insurance companies would start approving full roof claims.

But some still don't. Through a spokesman, the insurance commissioner says he was only offering his personal opinion. It carries no legal weight.

“So... why do we have a state insurance commissioner if he's not going to help people like me?” Gail Cash asked.

She's looking at a minimum of $10,000 out of pocket to replace her roof.

Some homeowners are trying a different tactic – going to court claiming the Atlas Chalet shingles themselves are defective. But this year a federal judge in Atlanta denied a request to make the case a Class Action lawsuit. That would have opened it up to as many as $100,000 homeowners like the Cashes. If they decide to go it alone, it won't be an easy fight. Atlas denies the shingles are defective and so far no judge has ruled otherwise.

Earlier this year, the insurance commissioner did take some action. American Family Insurance agreed to pay a $125,000 fine for canceling 18 policies simply because they had Atlas Chalet shingles. The company agreed to a consent order without admitting wrongdoing.

“I expected insurance companies to do the right thing and replace the whole roof if matching shingles could not be found,"  Commissioner Hudgens said in a written statement to the FOX 5 I-Team.  "The investigation into American Family Insurance Company, however, revealed that some policies expressly state that they will not pay for matching.  Because I believe most consumers are not aware of this policy limitation, I have asked American Family to remove the policy limitation which has caused so much confusion.  In addition to requesting that policy change, my office fined American Family over one hundred thousand dollars for violations discovered during our investigation. While this policy limitation has not helped matters, I believe the manufacturer of Atlas Chalet Shingles bears significant responsibility for the trouble that its discontinued and allegedly defective product has caused Georgia consumers.”

But that $125,000 won't be given to homeowners. It goes into the state's general fund.

“I'm a little aggravated," declared Gail Cash. "I'm irritated. And something needs to be done. They need to be held responsible. When you get homeowners insurance you kinda think they're standing behind you. They're not standing behind anybody.”

American Family Insurance released this statement:

"Overall, we feel vindicated by the results of the exam. It affirmed our claim practices are proper and our policy language is clear, questioned only a limited number of underwriting decisions and identified a technical fraud-reporting error. We apologize for the errors and have taken steps to prevent them from happening again. We’re excited to continue our focus on our customers.

The commissioner has asked us to change certain policy language that is currently consistent with policy language of other insurance companies. We are committed to providing exceptional customer value, which means striking an effective balance of insurance coverage people want and can afford. We are open to discussions with the commissioner’s office on this topic and its customer impacts."