State Farm lawsuit and Settlements Over Underpaid Claims

State Farm is one of the largest auto insurance companies in the United States. Unfortunately, it has faced multiple lawsuits and settlements for allegedly underpaying claims on total loss vehicles. If you have State Farm car insurance, the information in this article could be a game-changer. This article explores the details of state farm lawsuits, the key rulings, and the implications for policyholders.

State Farm lawsuit

State Farm is dealing with multiple lawsuits at the same time. These lawsuits challenge State Farm’s use of the typical negotiation adjustment to calculate total loss payments. In a class action lawsuit, over 20 plaintiffs claim that State Farm underpaid them by 4-11% for their totaled vehicles.

The main issue in the lawsuits against State Farm is that the company applies a “typical negotiation adjustment” to the actual cash value (ACV) of totaled vehicles. State Farm reduces the vehicle’s value by comparing it to similar used vehicles and applying a deduction. Policyholders argue that State Farm did not disclose this practice to them.

Now the question arises of how state farm lawsuits affect policyholders. These lawsuits have important implications for policyholders. If you have State Farm car insurance and your vehicle is totaled in an accident, understanding these lawsuits is crucial. Even if you’re insured with another company, this information reveals tactics insurers might use to reduce payouts to policyholders.

State Farm lawsuit

Case of Diane Newkirk

Let’s start with the case of Diane Newkirk. She was a New York resident, who owned a 2015 Subaru Impreza insured by State Farm. Repairerdrivennews mentioned that her vehicle was deemed a total loss in January 2021. According to the market valuation report from 1 February 2021, State Farm used Autosource to apply a typical negotiation adjustment of about 4-6%. This adjustment resulted in a lower valuation. Newkirk’s Declarations Page listed premiums, deductibles, and expenses. However, it did not mention the typical negotiation adjustment.

Illinois Case

Here we will discuss another case that was related to Illinois state. In this case, Judge Kendall agreed with State Farm that one plaintiff’s breach of contract claim should go to arbitration, not court. This was based on Minnesota’s No-Fault Act and the arbitration agreement in the plaintiff’s insurance policy. However, she also decided that the lawsuit should continue.

Legal Rulings

Several legal rulings have been made in the cases against State Farm. These rulings shed light on the company’s practices. They also reveal the judiciary’s stance on these issues.

  • December 21, 2023: Judge Kendall’s Order

State Farm did not inform policyholders about the typical negotiation adjustment. She further stated, “State Farm will pay the actual cash value of the covered vehicle, minus any applicable deductible.”

As of Justia, Judge Kendall denied State Farm’s motion to dismiss for failure to state a claim under federal Rule 12(g)(2). The rule seeks to reduce piecemeal consideration of a case by consolidating similar motions. Kendall noted that State Farm delayed the case for months by waiting to file its motion to dismiss. She wrote: “The trial has been delayed by months because State Farm stored its new arguments for a later petition. State Farm’s purpose of generating delay contradicts the spirit of Rule 12(g).”

  • July 2023: Texas Jury Award

Another notable case involves Joseph Wayne Collins from Texas. He sued State Farm because they deducted money from his total loss settlement. Initially, State Farm offered him $13,450 for his truck. Collins hired appraiser Robert McDorman, who valued the vehicle higher. After negotiations, State Farm increased their offer to $16,000 plus taxes. Despite this, Collins chose to take legal action. In July 2023, a jury awarded him $288,517.59. During the trial, State Farm deducted funds for pre-repair work. It was revealed that this work was done during a brief period when State Farm considered the vehicle repairable.

Montana Settlement

Montana Commissioner of Securities and Insurance, Troy Downing, announced that State Farm had agreed to pay a $2 million fine for using unfair claims procedures. This settlement follows a two-year investigation into State Farm’s handling of claims. A State Farm investigation revealed that some drivers involved in accidents between November 1, 2018, and April 15, 2022, received underpayments.

In addition, State Farm faces a suspended fine of $2 million, which will be enforced if corrective actions are not implemented. Commissioner Downing emphasized, “Auto accident victims in Montana will not be liable for unfounded claims of fault. Insurers should assess the facts and legal obligations thoroughly and fairly, and pay what is legally owed.” For further details check

State Farm lawsuit

Legal Assistance

If you think State Farm has offered you less money than you should get for your totaled vehicle, it’s important to act. Start by consulting with a lawyer who specializes in insurance claims and bad-faith practices. They can assess whether the settlement you received aligns with your policy terms. A professional appraisal and evidence gathering can further support your claim. These steps are crucial in ensuring you receive a fair outcome.

Read also: Suboxone Lawsuit


Last but not least, State Farm’s typical negotiation strategies have prompted several lawsuits and settlements, raising questions about how effectively they handle claims. In Texas, recent decisions made by Judge Kendall and substantial jury verdicts emphasize the consequences for the insurer. Policyholders should stay informed about their insurance coverage. Those who feel that they have been unfairly compensated should seek legal counsel. Hence, these cases emphasize the importance of thoroughly understanding your insurance policy’s terms and demanding fair treatment from insurers.

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