Met Property and Casualty Damage Payouts MI and TN Class Action

When an insurer calculates how much to pay out on a loss involving property, it generally subtracts an amount for depreciation of the property. However, the complaint for this class action alleges that Metropolitan Property and Casualty Insurance Company (MetLife) subtracts sums for the depreciation of labor. The complaint argues that labor does not depreciate over time and no depreciation should be calculated for it.

MetLife provides coverage for homes and mobile homes, including in Mississippi and Tennessee. Laws in these two states, the complaint says, are “materially identical” as to the matters involved in this case.

Plaintiff Tashal Shields had a policy with MetLife insuring his home in Mississippi against damage. The matter in this case relates only to damage to the building(s), not to loss or damage of personal property. Shields experienced a physical loss on the property on April 10, 2017. He contacted MetLife and the company agreed that was covered by the insurance contract. 

To calculate the actual cash value (ACV) payment, MetLife first estimated the cost to repair or replace the damage with new materials. This is called the replacement cost value (RCV). After that, it subtracted depreciation. However, that depreciation was applied to the full cost, that is, material plus labor. “Labor” here refers to the labor costs, the costs for the laborers equipment, the laborers’ overhead and profit, and the costs for removal of damaged property.

This was not inevitable or necessary, the complaint claims: “Like all property insurance claims estimated software, the specific commercial claims estimating software used by MetLife allows for the depreciation of materials only or the depreciation of both material and labor in its depreciation setting preferences.”

Also, it says, “While an insurer may lawfully depreciate material costs when calculating the amount of an ACV payment owed to an insured, it may not lawfully withhold repair labor as depreciation under MetLife’s policy forms at issue in Mississippi and Tennessee.” Therefore, it says, Shields was underpaid for her loss.

The class for this action is all MetLife policyholders who made (1) a claim for structural damage to a property in Mississippi or Tennessee, and (2) the claim resulted in an ACV payment, during the class period, from which non-material depreciation was withheld, or the claim should have resulted in an ACV payment but did not because of the withholding of non-material depreciation which caused the loss to fall below the amount of the deductible. Excluded are claims where the original ACV payment has exhausted the limits of the insurance.

The class period is defined as “the maximum limitations period as may be allowed by law and arguments of counsel.”

The main count is breach of contract.

Article Type: Lawsuit
Topic: Insurance
Tags: Auto Insurance, Deceptive Insurance Practices, Depreciation of Labor Costs