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Foremost Insurance Class Action Challenges Repair Reimbursements

This lawsuit alleges that Foremost Insurance Company Grand Rapids, Michigan breached its contractual duty to policyholders by depreciating both materials and labor costs in determining the “actual cash value” to paid for repairs, in violation of Arkansas law.  

Foremost Insurance Company Grand Rapids, Michigan (Foremost), based in Caledonia, Michigan, is a member of the Farmers Insurance Group of Companies.  Foremost offers a wide variety of home, life, commercial and auto insurance products and services across the United States, including specialty products such as coverage of mobile homes, motor homes, travel trailers and specialty dwellings.

Arkansas residents David Braden and Dale Brown each contracted with Foremost for insurance providing coverage for certain losses to a dwelling and other structures they respectively owned in Texarkana and Batesville, Arkansas.  In 2010, Brown submitted a claim to Foremost requesting payment for a covered loss to his property.  A Foremost adjuster estimated the cost of materials and labor required to complete the repairs to his property.  In calculating its payment obligations to Brown, Foremost subtracted from the adjuster's replacement cost value estimate the deductible provided for in the policy plus an additional amount for depreciation.  According to Brown, Foremost depreciated both material costs and labor costs associated with repairs to his property.  For example, Foremost estimated the total cost of painting the ceiling in a bedroom at $99.13 and then depreciated the cost of both materials and labor by $74.35, or 75%, to arrive at an actual cash value (ACV) of $24.78.

In 2012, Braden also submitted a claim to Foremost requesting payment for a covered loss to his property.  Using a similar methodology for calculating ACV by determining the cost of repairing or replacing the damaged property then deducting depreciation, for example, Foremost estimated the total cost of replacing the Braden’s fiberglass shingles at $2,305.64, then depreciated the cost of both materials and labor by $1,729.23, or 75%, to arrive at an ACV of $ 576.41.

Braden and Brown filed their class action suit against Foremost on December 10, 2015 (United States District Court Western District of Arkansas), on behalf of themselves and similarly situated individuals, alleging Arkansas contract law prohibited Foremost from depreciating the cost of labor when determining the ACV of a covered claim.  The complaint seeks class certification for all persons and entities that received "actual cash value" payments, directly or indirectly, from Foremost for loss or damage to a dwelling or other structure located in the State of Arkansas, arising from events that occurred on or after November 21, 2008, where the cost of labor was depreciated.  The complaint claims that Foremost's failure to pay the full cost of the labor necessary to repair or replace the damaged property in the ACV payment breached its contractual duty to pay the amount owed to claimants and left them under-indemnified and underpaid for their losses.

The complaint seeks damages in an amount equal to the total amount of depreciated labor costs withheld on class members' claims, additional damages in the amount of 12 percent of the depreciated labor costs recovered pursuant (Ark. Code Ann. § 23-79-208), prejudgment and post judgment interest, and attorneys' fees and costs.

Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

Foremost Insurance Complaint Challenges Repair Reimbursements

December 10, 2015

This lawsuit alleges that Foremost Insurance Company, Grand Rapids, Michigan breached its contractual duty to policyholders by depreciating both materials and labor costs in determining the “actual cash value” to paid for repairs, in violation of Arkansas law.  

foremost_insurance_acv_complaint.pdf

Case Event History

Foremost Insurance Complaint Challenges Repair Reimbursements

December 10, 2015

This lawsuit alleges that Foremost Insurance Company, Grand Rapids, Michigan breached its contractual duty to policyholders by depreciating both materials and labor costs in determining the “actual cash value” to paid for repairs, in violation of Arkansas law.  

foremost_insurance_acv_complaint.pdf
Tags: Deceptive Insurance Practices, Homeowners Insurance, Incomplete Refund, Insurance, Unfair Services, Your Home