Migliaccio & Rathod LLP is investigating whether certain California homeowners insurance companies have improperly reduced actual cash value payments by applying depreciation to the sales tax associated with replacing damaged personal property.
When personal belongings are damaged or destroyed in a covered loss, insurers may calculate actual cash value by estimating replacement costs and subtracting depreciation. These estimates can include the cost of replacement items and applicable sales tax. However, California litigation has raised questions about whether insurers may depreciate the sales tax component in addition to the physical property itself.
Migliaccio & Rathod is investigating whether insurers outside existing litigation have used this contested calculation method, potentially reducing payments to California policyholders whose damaged belongings were valued using depreciated sales tax.
Policyholders May Have Experienced:
- Receiving actual cash value payments that included depreciation of sales tax;
- Having sales tax reduced along with the value of damaged household belongings;
- Receiving less than the applicable actual cash value of covered personal property;
- Seeing separate sales tax depreciation deductions on claim estimates;
- Being unable to determine how depreciation was applied to replacement costs; or
- Having personal property payments reduced by depreciation of nonphysical costs.
Potential Claims May Include:
- Improper depreciation of sales tax in actual cash value calculations;
- Incorrect calculation of personal property insurance benefits;
- Breach of insurance contract;
- Improper underpayment of covered personal property losses; or
- Violations of applicable California insurance laws.
Signs You May Be Affected:
- You had a homeowners or renters insurance policy in California;
- You filed a covered claim involving damaged or destroyed personal property;
- Your insurer calculated payment using actual cash value;
- Your claim estimate included sales tax as part of replacement costs;
- Your insurer applied depreciation to the sales tax component; or
- You have an itemized claim estimate showing replacement costs, sales tax, and depreciation.
If you believe you experienced this issue, we would like to hear from you. Please complete the contact form on this page, send us an email at [email protected], or give us a call.