AAA Homeowners Insurance Claim Settlement Now Open

About the Auto Club Family Insurance Settlement

Missouri homeowners who filed structural damage claims with Auto Club Family Insurance may possibly receive reimbursements from a class action settlement. 

The settlement resolves allegations that Auto Club's computerized estimating software (Xactimate) inaccurately calculated labor and other nonmaterial costs when processing claims.

Auto Club Family Insurance Lawsuit Explained 

AAA home insurance policyholders filed a class action lawsuit in a Missouri state court alleging that Auto Club systematically deducted depreciation from labor costs and other non-material items when calculating actual cash value payments for structural damage claims.

Faulty software allegation 

The defendant admitted to using Xactimate and similar computerized estimating software to process some of these types of insurance claims. However, class plaintiffs argue that the software calculated depreciation not only on materials such as roofing shingles or siding, but also on the labor costs associated with installing those materials. 

According to the lawsuit, deducting labor cost depreciation improperly reduced the actual cash value settlements homeowners received after filing claims for storm damage, fire damage, and other covered losses.

What is nonmaterial depreciation?

Nonmaterial depreciation typically refers to reductions applied to costs beyond physical materials when insurance companies calculate claim payments. 

While material depreciation usually accounts for the age and condition of items like roof tiles or window frames, nonmaterial depreciation primarily targets associated costs such as:

• Labor charges for installation or repair work
• Contractor overhead and profit margins
• Equipment rental fees
• Permit and inspection costs

For example, if replacing a damaged roof costs $10,000, including $4,000 in labor, nonmaterial depreciation on that labor portion could reduce initial payment by hundreds or thousands of dollars.

How the process allegedly worked

• Home suffered covered damage (e.g., storm, fire).
• Adjuster calculated repair costs using Xactimate software.
• Auto Club applied depreciation to both materials AND labor
• Received an actual cash value settlement check.
• Payment allegedly often fell short of actual repair costs.

Many AAA policyholders say they found themselves unable to begin repairs because their insurance settlement didn't cover enough of the contractor's costs.

Attorneys for the class argued this practice violated Missouri law and the terms of the Auto Club's insurance policies. 

Who Can File a Claim in the Depreciation Lawsuit?

AAA policyholders must have filed an insurance claim for structural damage to property located in Missouri on or after June 5, 2012 and must have submitted their claim between June 5, 2012 and August 12, 2025.

Auto Club Family Insurance must have also issued the homeowners' insurance policy and must have used Xactimate or another computerized estimating software to process the claim.

Manual estimates don't qualify for the settlement.

Finally, Auto Club must have withheld nonmaterial depreciation from the claim payment, including situations where depreciation deductions caused the claim to fall below the deductible, resulting in no payment issued.

Claims that may qualify for insurance refunds

Several types of structural damage claims may possibly qualify for compensation including:

• Storm damage claims where Auto Club paid less than the full replacement cost.
• Fire damage claims with labor depreciation deductions.
• Water damage claims processed through Xactimate.
• Any covered peril resulting in structural damage.

The settlement also generally covers claims that would have resulted in payment but for nonmaterial depreciation, which would have dropped the claim value below your deductible. 

Who does the settlement exclude?

Certain policyholders cannot participate in this homeowners' insurance settlement including:

• Individuals who have exhausted their policy limits.
• Claims denied for reasons unrelated to depreciation.
• Policies without computerized estimates.
• Auto Club officers, directors, and employees.

Proposed Auto Club Settlement Compensation 

Possible reimbursement from the settlement fund will partly depend on whether the policyholder has already recovered the depreciation that Auto Club initially withheld.

Eligible claimants who haven't recovered depreciation

If Auto Club never reimbursed your nonmaterial depreciation, the policyholder may possibly receive:

• 100% of all withheld labor depreciation.
• 100% of other nonmaterial depreciation (overhead, profit, etc.).
• 5% annual interest from your ACV payment date to the final approval date.

For example, if Auto Club withheld $2,000 in labor depreciation from a 2018 claim, a policyholder could receive that $2,000 plus approximately $700 in interest (assuming final approval in 2025). 

Previously recovered depreciation

Policyholders who completed repairs and received replacement cost benefits may possibly receive these fixed settlement amounts:

• Twenty-five dollars: If nonmaterial depreciation was between $1 and $40,000.
• Fifty dollars: If nonmaterial depreciation was between $40,001-$80,000.
• Seventy-five dollars: If nonmaterial depreciation exceeded $80,000.

These payments acknowledge the financial hardship caused by initial underpayments, even for those who eventually received full compensation.

Additional settlement benefits

Beyond individual compensation, the settlement provides equitable relief:

• Auto Club must clearly disclose its depreciation practices.
• Future claims must specify whether depreciation is material or nonmaterial
• Improved transparency in the homeowners' insurance claims process.