When an insurance company figures the actual cash value (ACV) of a building that must be repaired or replaced, does depreciation apply to the full price of the building? The complaint for this class action takes issue with the practice of GuideOne Mutual Insurance Company in allegedly depreciating labor in the calculation of its payouts.
GuideOne does business in the states of Arizona, California, Illinois, Kentucky, Louisiana, Mississippi, Missouri, Ohio, Tennessee, Texas, Vermont, Washington, and Wisconsin, and the complaint alleges that the laws in all of these states are “materially identical” about the issues in this lawsuit. The complaint alleges, “Specifically, these states are all ‘replacement cost less depreciation’ states for purposes of labor by court decision or state administrative agency.”
The plaintiff in this case, Rivers of Life International Ministries, insured its church building in Grand Junction, Tennessee with GuideOne. On July 22, 2016, a storm damaged the building and Rivers of Life made a claim to GuideOne.
To determine the ACV, the complaint alleges, GuideOne first estimates the cost to repair or replace the damage with new materials, that is, the replacement cost value or RCV, and then subtracts depreciation. According to the complaint, the policy does not allow GuideOne to withhold future labor as depreciation.
GuideOne chose to use the “replacement cost less depreciation” method for calculating its ACV payment to Rivers of Life, the complaint alleges, and did not use any other method. Labor, in this case, the complaint alleges, “means intangible non-materials, specifically including both future labor costs and the future laborer’ equipment costs and contractors/laborers’ overhead and profit necessary to restore property to its condition immediately prior to the loss, as well as future removal costs to remove damaged property, under commercial claims estimating software.”
To make its calculations, the complaint alleges, GuideOne uses a software program called Xactimate, which allows the insurer to depreciate materials only or to depreciate both material and future labor costs. The complaint alleges that GuideOne improperly chose the second option.
This improper depreciation, the complaint alleges, breached GuideOne’s obligations under its policy and resulted in Rivers of Life receiving a smaller payment for its losses than it was entitled to.
The class for this action is all GuideOne policyholders (or their lawful assignees) who made (1) a structural damage claim for property located in Arizona, California, Illinois, Kentucky, Louisiana, Mississippi, Missouri, Ohio, Tennessee, Texas, Vermont, Washington, or Wisconsin, (2) which resulted in an ACV payment, during the class period, from which non-material depreciation was withheld from the policyholder, or which would have resulted in an ACV payment but for the withholding of non-material depreciation causing the loss to drop below the applicable deductible, for the maximum limitations period allowed by law.
Article Type: LawsuitTopic: Insurance
Most Recent Case Event
GuideOne Mutual Depreciation of Future Labor Complaint
June 3, 2022
When an insurance company figures the actual cash value (ACV) of a building that must be repaired or replaced, does depreciation apply to the full price of the building? The complaint for this class action takes issue with the practice of GuideOne Mutual Insurance Company in allegedly depreciating labor in the calculation of its payouts.
GuideOne Mutual Depreciation of Future Labor ComplaintCase Event History
GuideOne Mutual Depreciation of Future Labor Complaint
June 3, 2022
When an insurance company figures the actual cash value (ACV) of a building that must be repaired or replaced, does depreciation apply to the full price of the building? The complaint for this class action takes issue with the practice of GuideOne Mutual Insurance Company in allegedly depreciating labor in the calculation of its payouts.
GuideOne Mutual Depreciation of Future Labor Complaint