MINNEAPOLIS (WCCO) – It’s the second-largest insurer for homeowners in Minnesota. And now a local couple says American Family has been overcharging them for years.

Charles and Darlene Nelson have filed a lawsuit saying the insurance company valued their home way too high, which means they were paying for more insurance than they needed.

They are seeking class action status and their lawyer told WCCO Monday that he’s already had several calls from families who say they have the same problem.

The Nelsons built their home in 1990 and purchased a gold-star policy from American Family Mutual Insurance Company.

By 2004, the policy said it would cost $184,000 to replace the home. Over the next seven years, the replacement cost on the policy had jumped. By 2011 it was $454,500 – more than double. The American Homebuilders Association says construction costs only increased about 21 percent during that time.

The Nelsons were shocked. Their lawyer, Bert Black of Schaefer Law Firm, estimates this his clients overpaid about $3,500.

“Thirty-five-hundred extra over six years is a significant amount. The insurance company is taking a large amount of money to which it’s not entitled,” Black said.

In the lawsuit, the Nelsons accuse American Family of deceptive trade practices and overestimating the value of their home.

Stephen Witmer of American Family says it stands by its coverage, and that its valuations are determined partly by region, inflation and consumer preferences.

“A house fire or other catastrophic loss is the wrong time to find out that your insurance limits have not kept pace with increases in the cost of labor and materials,” Witmer said.

A spokesperson with the Department of Commerce said she did not know of any complaints similar to the Nelsons, but acknowledged their search functions are not set up for the kind of detail. She also said there is no Minnesota law that would determine how to estimate the cost of replacing a home.