Some insurance companies may have to make a change to how they settle certain kinds of home damage claims in Michigan next year.
In many cases, insurance companies pay actual replacement costs for property damage claims.
But if the homeowner decides to take what's called Actual Cash Value instead, the company often depreciates or discounts the value of materials to fix the property, to account for wear and tear to the original materials.
The state Department of Insurance and Financial Services says some companies may be deceiving consumers by also depreciating the cost of labor — which is not a physical thing that can lose value from wear and tear.
Beginning next year, labor depreciation will only be allowed if the homeowner explicitly agrees to it in exchange for a lower premium.