Shane Smith wrote about a big policyholder win against Allstate in this weekend’s post, Another Court Ruling on Improper Depreciation of Labor. Today, the same Court of Appeals ruled the same way against State Farm.1

This is what the court said today:

When a storm damaged Cranfield’s home, he filed a claim with State Farm. An adjuster estimated the total cost to repair Cranfield’s home as well as how much the home had depreciated since its original construction. State Farm and Cranfield agreed that State Farm could make deductions from Cranfield’s recovery amount to reflect the depreciated value of the material used to construct the home. But they disagreed whether the policy also allowed for deductions for the depreciated value of the labor costs to construct the home….

Whether labor depreciation is properly deducted in an actual cash value insurance policy has divided courts across the nation. Accardi v. Hartford Underwriters Ins. Co., — S.E.2d –, 2020 WL 987541, (N.C. Feb. 28, 2020) (collecting cases). Agreeing with the majority of courts to address the issue, the district court dismissed Cranfield’s complaint, holding that the State Farm policy unambiguously allowed for depreciation deductions for both material and labor costs. Cranfield appealed.

We recently resolved this issue in Perry v. Allstate Indem. Co., — F.3d –, 2020 WL 1284960 (6th Cir. Mar. 18, 2020). In Perry, we held that an Ohio insurer may not deduct the cost of labor depreciation pursuant to an actual cash value insurance policy that does not expressly provide for such deductions…. Because Cranfield’s policy with State Farm did not expressly provide for labor-cost depreciation deductions, Perry commands the same result here. Ogle v. Ohio Civil Serv. Emps. Ass’n, — F.3d –, 2020 WL 1057389,(6th Cir. Mar. 5, 2020) (per curiam). We therefore REVERSE the judgment of the district court and REMAND for further proceedings consistent with this opinion.

We filed pro bono amicus briefs on behalf of United Policyholders in each case. United Policyholders quietly goes about supporting policyholder interests throughout the country. It is an honor to be able to volunteer for their cause.

I bet many old-time property adjusters at Allstate and State Farm are silently happy about these results. The new claims managers are just trying to save nickels, dimes, and a lot more to pad the bottom line. Those companies should be happier when they advertise that they are the “Good Hands People” and a “Good Neighbor” because these cases are forcing them to be that way.

Monday Afternoon Thought

I have held many things in my hands, and I have lost them all; but whatever I have placed in God’s hands, that I still possess.
—Martin Luther
1 Cranfield v. State Farm Fire & Cas. Co., No. 19-3004 (6th Cir. March 23, 2020).