News: 2007 Press Release

SACRAMENTO - California Department of Insurance (CDI) protections for homeowners filing claims has been upheld by the California Superior Court. The Court ruled that insurers may not depreciate the cost of labor when paying on homeowners' insurance claims. That practice by insurers forced homeowners to make up the difference and increased their out-of-pocket expenses to repair damage to their homes.

The ruling comes in response to a 2003 lawsuit filed by insurance trade organizations which challenged almost every section of CDI's amendments to the Fair Claims Settlement Practice Regulations. The Department of Insurance's sweeping amendments increased protection to consumers and set more stringent standards for insurers. All but the "depreciating labor" issue were settled through negotiations. "

This is good news for California homeowners," said Insurance Commissioner Steve Poizner. "When you pay for homeowners' policy and file a claim, you should get the coverage you pay for. We were confident the court would agree."

At issue was whether labor costs could be depreciated. The Court ruling upheld CDI's view that unlike physical property, the labor does not lose value through the passage of time, and therefore can not be depreciated. Whether you are installing new replacement carpet or old replacement carpet, the cost of installing it would be the same.