West Bend Mutual Insurance Settlement Reimburses Depreciation Costs

About the West Bend Settlement

West Bend Mutual Insurance Company has agreed to settle a class action lawsuit alleging the company improperly calculated insurance claim payments by depreciating labor costs alongside materials. 

Policyholders who filed structural damage claims between 2012 and 2022 could possibly receive significant compensation from the recently filed class action.

Insurance companies typically do not deduct depreciation from labor costs on claims, as labor is a service that doesn't lose value in the same way that physical materials do.

What was the West Bend Mutual Insurance Class Action About?

This insurance lawsuit centers on a practice called “nonmaterial depreciation”.

Labor depreciation explained

When policyholders file insurance claims for structural damage, insurers usually calculate the amount they'll pay based on the actual cash value (ACV) of the repairs.

This rule typically means replacement cost minus depreciation—a 10-year-old roof isn't worth what a new roof costs.

However, unlike a damaged roof or broken window that deteriorates over time, labor doesn't lose value. A carpenter's skill today costs the same whether they're fixing new damage or old damage. 

Overcharge allegations 

Plaintiffs say West Bend calculated property damage ACV payments using Xactimate software, which allegedly depreciates both materials and labor costs. 

Nonmaterial depreciation typically includes:

• Labor costs for repairs
• Overhead expenses
• Contractor profit margins
• Other non-physical components of repair estimates

West Bend’s valuation software allegedly treated these costs as if they depreciated like physical materials, potentially reducing policyholder compensation below what their policies promised.

• Consider This: if a person’s home requires $10,000 in repairs, with $6,000 allocated for materials and $4,000 for labor, depreciation generally should only apply to the materials. By depreciating that $4,000 labor component, West Bend potentially shortchanged policyholders on the structural loss claim.

Who Can File a Claim in the West Bend Settlement?

Eligibility for this settlement depends on where the property was located and the type of damage that occurred:

Illinois, Kentucky, Ohio, Tennessee, Virginia, and Wisconsin properties

• Date of loss between March 29, 2020 and June 30, 2022.
• West Bend must have used an Xactimate estimate for your claim.
• Received an ACV payment with nonmaterial depreciation withheld.

Missouri Properties 

• Date of loss between March 29, 2012 and June 30, 2022.
• Same Xactimate and ACV payment requirements apply.
• Extended timeframe reflects Missouri's longer statute of limitations.

Qualifying structural loss claims

Policyholders don't need to have submitted massive claims to qualify for reimbursement. The settlement generally covers both personal and commercial property insurance claims for various types of structural damage including:

• Single-family homes
• Apartment buildings
• Manufactured homes
• Condominiums
• Rental properties
• Commercial buildings
• Other structures covered by West Bend policies

The claim may possibly qualify if West Bend either issued an ACV payment with nonmaterial depreciation deducted, or if the depreciation deduction caused the loss to fall below your deductible, resulting in no payment at all. 

Excluded class

Not every West Bend policyholder is eligible to participate in this settlement. 

The administrator will likely exclude claims if:

• Policy specifically allowed for depreciation of labor (using both words "depreciation" and "labor" in the policy text).
• Claim payment exhausted policy limits.
• West Bend denied or abandoned the claim for reasons unrelated to nonmaterial depreciation.
• Insurer did not use Xactimate software.

Policyholders unsure about their eligibility or status can contact the settlement administrator at 1-866-604-6917.

Proposed Settlement Compensation 

Illinois, Kentucky, Missouri, Ohio, and Tennessee

Policyholders in these five states may possibly recover 100% of all nonmaterial depreciation that West Bend allegedly withheld and never subsequently paid. 

Eligible class members from the states may also receive 5% simple interest per year calculated from their final ACV payment date through July 1, 2025.

Virginia and Wisconsin Policyholders

Virginia and Wisconsin class members may possibly receive 80% of withheld nonmaterial depreciation, plus 5% annual interest through July 1, 2025. 

This difference in payment percentages reflects variations in state insurance laws and the specific legal theories applicable in each jurisdiction. 

Previously recovered depreciation

Some West Bend policyholders have already recovered their depreciation when they completed repairs and submitted the necessary documentation to their insurer.

Of Individuals in this category, many still possibly qualify for compensation based on their original nonmaterial depreciation amount:

• $1 to $5,000.99: $25 fixed payment
• $5,001 to $10,000.99: $50 fixed payment
• $10,001 to $20,000.99: $100 fixed payment
• $20,001 to $40,000.99: $200 fixed payment
• $40,001 to $60,000.99: $300 fixed payment
• $60,001 to $80,000: $400 fixed
• $80,000+: $500 fixed payment

These payments acknowledge the time value of money and compensate for the period during which policyholders were without funds while waiting to recover depreciation.