TSC Rules Companies Cannot Depreciate Labor Costs in Insurance Payments for Property Damage

In addressing a certified question from the U.S. District Court for the Middle District of Tennessee, the Tennessee Supreme Court has ruled that insurance companies cannot depreciate labor costs in insurance payments for property damage. In Lammert et al. v. Auto-Owners (Mutual) Insurance Company, the court determined that the language of the insurance policies in question were susceptible to two or more reasonable interpretations on whether labor costs could be depreciated. Under Tennessee law, when an insurance policy is ambiguous, the policy is construed against the insurance company as the author of the policy.
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