Three separate class actions have been filed in Missouri challenging how depreciation is used in calculating the actual cash value of property damage under homeowners and commercial property insurance policies. In the past insurers used replacement-cost-less-depreciation to calculate actual cash value. This calculation takes the entire estimated replacement cost of property (materials, labor and other items) and depreciates the property based on age and condition. The Missouri class actions allege only materials should be depreciated as a component of the replacement cost, and labor should not be depreciated.
The Missouri class actions raising the labor depreciation issue are McLaughlin v. Fire Insurance. Exchange., 1316-CV11140 (16th Circuit Court for Jackson County, Mo.); Bellamy v. Nationwide Affinity Insurance Company, 1516-CV06346 (16th Circuit Court for Jackson County, Mo.); and Riggins v. American Family Mutual Insurance Company, 2:14-cv-04171-NKL (W.D. Mo.). No rulings on the merits or class certification in any of the three class actions have been rendered.