I know this may not be news for some you but it should help.
Most of the adjusters writing estimates of in Xactimate are depreciating labor and material when they apply depreciation. If this depreciation is not recoverable it can impact the payout significantly.
When writing your estimate use 3 line items instead of 2.
Remove
Material, Apply depreciation.
Install
Writing your estimates this way will apply depreciation to items that are truely depreciable and not labor which is used up immediately and should not be depreciated.
It has worked for me and hopefully it will help yall.
I ask because there is case law to the contrary. This case holds that labor to remove is not depreciable because it is part of the debris portion of the policy. It holds that install labor is depreciable.
It’s a 10th Circuit Federal Appeals Court case and even though it is in a different circuit than Texas (5th Circuit) it is highly likely that the 5th Circuit would follow this ruling.
I’m just curious if you have information to the contrary.
I ask because there is case law to the contrary. This case holds that labor to remove is not depreciable because it is part of the debris portion of the policy. It holds that install labor is depreciable.
It’s a 10th Circuit Federal Appeals Court case and even though it is in a different circuit than Texas (5th Circuit) it is highly likely that the 5th Circuit would follow this ruling.
I’m just curious if you have information to the contrary.[/quote]
Dstew,
I do not have any information to the contrary. However, when working as an adjuster on Texas Claims I was taught to only apply depreciation to Material. That is how I came up witht he thaught of using this arguement.
I can say is I have used this method and it has worked in the past.
Help me with this one but doesn’t that case law defy common sense? Isn’t labor used up immediately?
Maybe I have just been lucky in the past and sold it to the adjuster and noone caught it.
I will do some more research and see what I can come up with.
Using common sense in the same sentence with case law is many times an oxymoron. I use the method you mentioned at times but not for the reason you are suggesting. I use it on items like felt paper where you use 9.5 rolls but have to buy 10. I wasn’t suggesting you are wrong in what you are doing, I was merely pointing out that there was a court case that stated otherwise. By all means if you were taught that way and it is working keep on doing what you are doing. Just be aware that unless you have something else to support your position there is something out there that goes against it.
This is really only an issue if you are dealing with ACV, which was the issue in the case.
Oops, I read it wrong. I guess depreciating the labor actually makes sense to me. It is part of the value of the overall product. It’s one of those issues I could play devil’s advocate for either side and make an equally compelling case.
