State Farm Can't Factor Labor Into Loss Value, Ill. Court Says

Law360 (July 27, 2020, 9:31 PM EDT) -- An Illinois appellate court ruled Friday that state law does not automatically allow insurers to depreciate the cost of labor in calculating the actual cash value of a loss, resolving a question in a putative class action that accuses State Farm of undervaluing claims through its homeowners policies.

The depreciation of labor costs is a novel issue for Illinois courts, the appellate panel said. It concluded that a provision of the Illinois Administrative Code governing replacement costs deals only with tangible property and not services like labor. 

State Farm had contended that a provision of the Illinois Administrative Code provides that...

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