Illinois Homeowners Win in State Farm Loss Value Case

A case concerning State Farm’s coverage of residential property may have implications for the auto glass industry in the future.

The Supreme Court of Illinois supported a proposed class of homeowners in Jarret Sproull v. State Farm Fire and Casualty Co. on Sept. 24. The homeowners accuse State Farm of depreciating labor costs and the cost of materials when the insurance company handles property damage claims. Allegedly, State Farm does not disclose this practice to policyholders.

Illinois Supreme Court said the policy was ambiguous and sided with the homeowners in a decision of 6-0. This decision disputed the conclusion brought by an appellate panel in July 2020 that the language of State Farm’s policy and relevant Illinois insurance regulation forces the interpretation that labor costs may not depreciate. The Court also agreed that both State Farm’s interpretation that labor costs may depreciate and lead plaintiff Jarret Sproull’s interpretation are reasonable.

Supreme Court justices found that the policy is ambiguous about labor depreciation, so the court was required to side with the insured if the insured’s interpretation was reasonable. With multiple reasonable interpretations, the court does not choose which interpretation is correct, and the ambiguity of the policy’s language is interpreted according to the average, ordinary individual.

Labor does not depreciate in value, the court found, because labor does not lose value over time or because of wear and tear as materials do. In actuality, the insured can be in a worse situation than before loss because of depreciated labor.

Sproull filed the suit in September 2016 after a storm damaged his home in 2015.

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