Home Insurance Claim Depreciation Lawsuits
October 11, 2013
Important Information
Attorneys working with ClassAction.org are no longer investigating this matter. The information here is for reference only. A list of open investigations and lawsuits can be viewed here.
At A Glance
- This Alert Affects
- Anyone who received an "estimate of loss" after submitting a claim through their homeowners' insurance.
- What's Going On?
- Reports have surfaced that some insurance companies may be ripping off policy holders – and we're looking to help these homeowners take action.
- Is There Any Proof?
- At least one lawsuit has been filed alleging that the insurance company illegally stiffed homeowners who submitted claims following fires, storms, etc.
What Started This Investigation?
Attorneys began looking into a possible lawsuit after State Farm was sued for allegedly taking advantage of its customers. In a lawsuit filed in Minnesota, State Farm was accused of illegally depreciating labor costs – which, unlike materials, don’t change in value over time.
Labor vs. Materials Depreciation – What’s It All Mean?
Assume that a storm hit your home and damaged your living room windows. Your insurance company sends an inspector out who determines that damage is covered under your contract. The adjuster may then provide you with an estimate of loss that determines how much it will cost to remove and replace your windows. In that estimate, the company will typically deduct a certain amount for “depreciation of materials” because, as your windows age, they become less valuable.
State Farm and possibly other insurance companies, however, have been accused of also depreciating labor costs even though the cost of labor doesn’t depreciate over time. The worst part is that many policyholders don’t realize that they are losing money because many insurance companies’ estimate of loss paperwork will include both labor and materials on the same line. These line items are often marked “R&R,” which stands for repair and replace, making it impossible to determine what costs are actually being depreciated.
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