DC regulator: depreciating labor on a property claim is an unfair practice
DC regulator: depreciating labor on a property claim is an unfair practice
2026-09-09 · District of Columbia · Regulation
The District of Columbia's insurance regulator has told every property and casualty insurer licensed in the District that depreciating the labor component of a repair estimate is an unfair claims settlement practice. For a condominium association settling a roof, envelope or water-damage claim on an actual-cash-value basis, that is the single most useful sentence a District regulator has published in years.
Bulletin 25-IB-001-08/12 was issued August 11, 2025 by Commissioner Karima M. Woods of the Department of Insurance, Securities and Banking, addressed to “All Property and Casualty Insurance Companies Licensed to Do Business in the District of Columbia.”1
What it says
The operative language is short and unhedged:
“This Department considers the depreciation of labor and other nontangible items in the definition of ACV to be an unfair claims settlement practice pursuant to D.C. Code § 31–2231.17(b)(6). For the purposes of this Bulletin, nontangible items are defined as labor, taxes, fees, and overhead and profit.”
And, prospectively: “For the reasons stated above, the Department will not approve any policy form with language that allows for depreciation of labor.”
The reasoning is equally direct. “Labor, unlike physical materials, does not lose value or break down over time. The practice of depreciating labor expenses on property damage claims float a significant part of the labor repair costs to the consumer. This unfairly shifts the burden to the consumer during the repair process.”
Why this lands hardest on associations
Because of what association claims are made of.
An actual-cash-value settlement pays replacement cost less depreciation, with the withheld amount recoverable once the work is done. On a residential roof, a facade repair or a burst-pipe remediation, labor is the majority of the cost. Materials are the smaller half. So a carrier that applies its depreciation factor to the whole estimate — rather than to the materials line alone — withholds substantially more of the claim up front than the depreciation of the physical roof would justify.
For a District association, that gap is a cash-flow problem before it is anything else: the association has to fund the repair to trigger recovery of the withheld depreciation, and the amount it must front is the amount in dispute.
What a board can do
Pull the last two years of estimates. This is the concrete step. Ask the managing agent for every property claim settled since 2024 and look at the depreciation lines in the carrier's estimate. Xactimate-style estimates itemise labor and materials separately, so the question — was depreciation applied to labor? — is answerable by reading the sheet.
Where it was, raise the bulletin. A board writing to an adjuster with the bulletin number, the quoted sentence and the statutory citation is in a different position from one arguing that the settlement feels low. The bulletin is the Department's published position, not an advocate's characterisation of it.
Understand the limits. Two, and both matter.
First, a bulletin is not a statute and not a rule; it is the regulator's statement of enforcement posture and form-approval policy. It binds the Department's approval decisions going forward. Whether a particular past settlement is reopened is a matter between the association and the carrier, and a bulletin is leverage rather than an entitlement.
Second, the form-approval sentence is prospective. Policies already in force with contrary language do not rewrite themselves. What the bulletin establishes is that the practice is an unfair claims settlement practice under § 31-2231.17(b)(6) — which is the argument, and it does not depend on the form having been approved after August 2025.
Where it fits in the DC condominium insurance picture
Three things are moving in District condominium insurance at once, and they do not point the same way.
This bulletin increases what an association recovers on a claim, by keeping labor out of the depreciation calculation.
A pending bill would shift deductible exposure from the association to the unit owner in whose unit damage originates, raising the statutory pass-through from $5,000 to $25,000 — covered in our report on Bill 26-495.
And the secondary mortgage market has capped what a master-policy deductible may be for a project to remain warrantable, at $50,000 per unit, alongside a requirement that owners carry coverage for the gap — covered in our report on the Fannie Mae and Freddie Mac changes.
A board reading only one of the three will misjudge its exposure.
What to watch next
Whether DISB moves from bulletin to rulemaking. A bulletin can be withdrawn; a regulation cannot, without process. The Department's Insurance Advisory Committee has carried “Code Modernization” and “Water Damage Protection Coverage” as standing agenda items, and water damage is the leading claim driver in this market — so that is where a rule, if one comes, would originate.
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