Safeco Insurance Actual Cash Value Class Action

This class action lawsuit alleges that Safeco Insurance Company categorically and unlawfully excluded General Contractor's Overhead and Profit (GCOP) amounts from Actual Cash Value payments made to policyholders for casualty loss claims before such expenses were billed by a contractor, despite the existence of Arizona case law prohibiting insurers from treating such costs as payable only when actually incurred.

Defendant Safeco Insurance Co. has its principal place of business in Boston, Massachusetts and is licensed to do business in Arizona and offer personal property/casualty insurance, including homeowners and fire coverage. The defendant markets and issues homeowners insurance policies within Arizona which all contain substantially the same provisions with respect to the settlement of losses.

Safeco issued an Arizona homeowners insurance policy to the plaintiff in this action, who ultimately suffered a covered loss on December 11, 2014. A claim was subsequently committed to Safeco, which accepted coverage and made payment to the plaintiff, though the plaintiff alleges that the insurance company improperly excluded a portion of the cost associated with asbestos testing and content manipulation. Safeco took the position that the company was not liable for General Contractor's Overhead and Profit for those tasks, asserting that the company does not pay such amounts on incurred bills unless and until they are included on a bill from a General Contractor.

According to the complaint filed in Superior Court of the State of Arizona in Maricopa County, in order to remain in compliance with Arizona law, insurance policies sold in the state define "Actual Cash Value" (ACV) to mean "the amount it would currently cost to repair or replace covered property with new material of like kind and quality…". Thus, under Arizona law, an ACV payment to a claimant would have to include all costs "likely required" to be incurred in repairing or replacing the loss, even if the insured decides not to repair or replace the loss. The plaintiff argues that Safeco is therefore prohibited from treating costs likely to be incurred as "Pay When Incurred" (PWI) as its representatives attempted to do with regard to his claim. 

It is asserted that this proposition has been the law of the land in Arizona since 2006 and is well known to insurance carriers doing business in the state. However, the plaintiff alleges that Safeco has adopted a company-wide policy contrary to this fact, and that its attempted denial of payment for GCOP in his case was not the inadvertent mistake of a single claims adjuster. Plaintiff argues that Safeco also unlawfully treats sales tax, architectural/drafting fees, engineering fees, insurance, permits & fees, temporary power usage and temporary toilet expenses as PWI, excluding them from ACV payments.

The complaint accuses Safeco of breach of express contract and bad faith and seeks class certification, compensatory damages, declaratory or injunctive relief and the attorney fees and costs associated with bringing suit.

 

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