Allstate Insurance Alleged to Pay Inaccurate Actual Cash Values

This class action alleges that Allstate Insurance Company and Allstate Property and Casualty Company violated the California Insurance Code in figuring ACV (actual cash value) for insured property.

This case was originally filed in San Mateo County (as case no. CIV536091, on November 2, 2015) and has been removed to the California Northern District Court. It is related to a previous case, Enger v. Allstate, case number 34- 2009-00055378, filed July 27, 2009, which was removed to federal court and dismissed because, at the time, the plaintiff, Linda Enger, had not yet exhausted her administrative remedies.

The class for this action includes all California residents insured under an Allstate homeowners insurance policy who received a first party settlement, or offer for settlement, or an appraisal of a personal property claim containing personal property paid on an Actual Cash Value basis for less than the policy’s limits between November 3, 2011 and the time of trial of this action.  

Plaintiff Enger had a homeowners insurance policy with Allstate covering her home in Belmont, California, which experienced a partial loss due to a fire. According to the complaint, if she did not repair or replace the lost property, her policy permitted her to receive payment on an actual cash value (ACV) basis, with a deduction for depreciation.

According to the complaint, the California Insurance Code, Section 2051(b) says, in part, that the ACV for a partial loss to a structure or its contents is determined by “the amount it would cost the insured to repair, rebuild, or replace the thing lost of injured less a fair and reasonable deduction for physical depreciation based up its condition at the time of the injury or the policy limit, whichever is less…”

The complaint contends that “physical depreciation” means wear and tear and does not include two other kinds of depreciation, functional obsolescence (loss of value due to a change in style or design) or economic obsolescence (loss of value due to external conditions), which may be used for tax or accounting purposes.

According to the complaint, the California Code of Regulations, Title 10, Section 2695.9(f) further states that insurance claim amounts adjusted for depreciation “shall be discernable, measurable, itemized, and specified as to dollar amount”; that adjustments for depreciation “shall reflect a measurable difference in market value attributable to the condition and age of the property”; and that the “basis for any adjustment shall be fully explained to claimant in writing.”

The complaint contends that Allstate’s means of figuring depreciation are secret, but that the plaintiff believes they are based on a depreciation percentage calculated based on the age and category of item, but not its condition. It claims that the depreciation tables Allstate uses are not a measure of physical depreciation and that its adjusters “cannot override depreciation amounts” calculated by the company’s tables. In addition, it claims that Allstate does not ask about the condition of items at the time of loss, and therefore cannot take this into consideration in its calculations.

Finally, the complaint contends that appraisers cannot be used to settle this matter, since they cost the insured additional money, and since the service they provide is irrelevant because it does not have anything to do with the legality of the way that Allstate calculates depreciation.

Article Type: Lawsuit
Topic: Consumer
Tags: Actual Cash Value, Deceptive Insurance Practices, Homeowners Insurance, Your Home