State Supreme Court Rules Insurance Companies Cannot Depreciate Labor Costs In Insurance Payments For Property Damage

Monday, April 15, 2019

Tennessee Supreme Court addressed a certified question from the United States District Court for the Middle District of Tennessee regarding whether an insurance company can depreciate the cost of labor when calculating actual cash value payments for property damage claims. 

The homeowners in this case had home insurance policies with Auto-Owners (Mutual) Insurance Company and suffered damage to their properties.  Under both of the policies presented in the lawsuit, the insurance company calculated the actual cash value of the damaged property by first calculating the replacement cost of the damaged property and then adjusting that number by depreciating both labor and material costs.  The homeowners filed suit and argued that the insurance company’s practice of depreciating labor costs was a breach of their contracts.  The insurance company countered that labor costs are depreciable under the terms of the policies. 

The Supreme Court determined that the language of the policies was ambiguous, that is, susceptible to two or more reasonable interpretations, regarding whether labor costs could be depreciated.  Under Tennessee law, when an insurance policy is ambiguous, the policy is construed against the insurance company as the author of the policy.  Consequently, the ambiguous policy language in this case had to be interpreted in favor of the homeowners, meaning that labor costs could not be depreciated when calculating actual cash value.

To read the unanimous opinion in Lammert, et al. v. Auto-Owners (Mutual) Insurance Company, authored by Justice Roger A. Page, go to the opinions section of TNCourts.gov.



CARTA Releases Concepts For Chattanooga's Transit Future

New Hamilton County Business Licenses

Leadership Cleveland Celebrates 2018-19 Graduates


CARTA will host a public meeting to discuss four possible transit concepts as part of the second phase of CARTA’s Redesign: Planning for the Future planning study. The meeting will be held ... (click for more)

Here are the new business licenses from the County Clerk's office: A+ QUALITY CONSTRUCTION LLC ADRIANA P HERNANDEZ 4 CONSTRUCTION CONTRACTOR 1106 S. SEMINOLE DR. EAST RIDGE TN 37412 ABSOLUTELY ... (click for more)

The Leadership Cleveland Alumni Association celebrated the 2018-19 class graduates on Thursday, which included a keynote address by Ron Harris, vice president Diversity and Inclusion with BlueCross ... (click for more)


Business

CARTA Releases Concepts For Chattanooga's Transit Future

CARTA will host a public meeting to discuss four possible transit concepts as part of the second phase of CARTA’s Redesign: Planning for the Future planning study. The meeting will be held Thursday at 5:30 p.m. at the Downtown Chattanooga Public Library - Main Auditorium. CARTA wants the community to help decide what the future of public transit should look like in Chattanooga. ... (click for more)

New Hamilton County Business Licenses

Here are the new business licenses from the County Clerk's office: A+ QUALITY CONSTRUCTION LLC ADRIANA P HERNANDEZ 4 CONSTRUCTION CONTRACTOR 1106 S. SEMINOLE DR. EAST RIDGE TN 37412 ABSOLUTELY FABULOUS INTERIOR NANCY ARELLANO 3 INTERIOR HOME IMPROVEMENT 1035 MT. CREEK RD STE 117 CHATTANOOGA TN 37405 ACTION SERVICE, LLC CHUCK HALLORAN 3 HANDYMAN SERVICES 605 MARLBORO ... (click for more)

Breaking News

Police Charge Jason Ansley In Wreck On Main Street In Which 9-Year-Old Boy Was Killed; Going 62 MPH In 35 MPH Zone

Chattanooga Police have arrested 38-year-old Jason Ansley in a June 7 wreck on Main Street in which 9-year-old Liam Haddock was killed and two other family members injured. Police said it was determined that Ansley was traveling 62 mph in a 35 mph zone and he was caught on video running a red light at S. Orchard Knob just prior to the 9:08 p.m. crash. Police said Ansley, who ... (click for more)

Smedley, Bankston Say They Are No Votes On Property Tax Increase

Two County Commission members on Monday told members of the Pachyderm Club that they are no votes on a property tax increase. Sabrena Smedley, who currently chairs the commission, said there are a number of unanswered questions about the school system, including how the latest test scores will turn out and how much in repairs the schools will face under a new study. She said ... (click for more)

Opinion

Why I Support Funding The Proposed Budget

Dear Commissioners of Hamilton County, I attended the District 3 community meeting with Commissioner Greg Martin and School Board Chairman Joe Wingate, who was filling in for District 3 Rep. Joe Smith. Commissioner Martin stated he had not made up his mind on how to vote for the tax increase at that time. He requested thoughtful input on why the citizens of his district wanted ... (click for more)

Roy Exum: VW Needs Big Repairs

The banner headline on Monday morning read, “Gov. Lee, top Republicans celebrate failed UAW bid to unionize Volkswagen,” and that’s the second-worst thing that the headline could have said. The worst, of course, is if the UAW had won, and the Detroit-based union that lost 35,000 members last year would be revived -- breaking a hole into the tight wall of foreign-owned auto assembly ... (click for more)