Some Neighbor: Class Action Lawsuit Against State Farm Is Moving Forward

State Farm is being sued by several policyholders stemming from allegations that the company engaged in fraud — the specifics of their conduct certainly doesn’t align with their promise of being a “good neighbor.”

If you carry your car insurance with State Farm and have experienced a total loss of vehicle after a car accident, you may find it beneficial to know more about this class action lawsuit that has recently been permitted to move forward on the merits. Even if you are insured with another car insurer this article will shed light on some of the tactics all insurers are capable of employing to trim payouts to their policyholders.

Why is State Farm being sued?

According to Repairer Driven News, a District judge in Illinois “ordered a class action lawsuit to continue against State Farm by more than 20 plaintiffs over underpaid actual cash value (ACV) on total loss vehicles.” The plaintiffs in this lawsuit are stating that State Farm gave them between four to 11 percent less than what they should have been given for their totaled vehicles. The insurance company did this by using a “typical negotiation adjustment,” which involved comparing prices of the vehicles in the accident claims to similar used vehicles online. As a result, the plaintiffs are claiming that this practice is not only fraudulent, but it also does not align with their insurance policy agreements.

The class action lawsuit against State Farm suggests that the insurance company “is ignoring the realities of no-haggle pricing that has become common in the used car market.” This means that the discount or typical negotiation adjustment that State Farm is using does not accurately match the prices of these vehicles on the market. The reason for this is because the prices that you see on used cars are usually negotiable, which makes it difficult to compare that price with other vehicles that have been involved in an accident.

What makes this lawsuit viable?

The District Court judge in this case, Virginia M. Kendall, explains that State Farm failed to let their policyholders know about the typical negotiation adjustment that they were using or what it consisted of. This is something that the individuals should have been made aware of before they ever agreed to do business or sign any policy agreements with the insurance company. Instead, each plaintiff’s policy states that “State Farm shall pay the actual cash value of the covered vehicle minus any applicable deductible.” It also explains that “if a deductible applies to Comprehensive Coverage, then it is shown on the Declarations Page.” In addition, it mentions that “the deductible that applies to the Collision Coverage is shown on the Declarations Page.”

The judge backed up her facts with an example of a 2015 Subaru Impreza, which was owned by one of the Plaintiffs from New York. The vehicle was totaled in 2021, and the market value of the vehicle was about four to six percent higher than what State Farm gave the plaintiff. While the Declaration Page on her policy explained several important aspects, such as deductibles, premiums, and other expenses, it never touched on the typical negotiation adjustment.

All 20 plaintiffs are seeking “unspecified damages, costs, and pre- and post-judgment interest, as well as an injunction against State Farm.” Interestingly, the judge noted that this is not the first time State Farm has been sued over its typical negotiation adjustment system. In fact, a man in Texas, Joseph Wayne Collins, filed a lawsuit in July 2023 against the insurance company for not giving him his full settlement for his totaled vehicle. Right after the accident, State Farm offered Collins around $13,000 for his vehicle. However, he had the vehicle appraised by another company and found out that it was worth more than the company was offering. Once he brought this to the attention of the insurance company, they offered him $16,000 plus taxes, but he decided to take legal action. As a result, the jury gave him $288,517.

Defining a “totaled vehicle” or “total vehicle loss”

Many people have heard of the terms “totaled vehicle” or “total vehicle loss” but are not sure what exactly they mean. The Progressive Casualty Insurance Company explains that “a totaled car is one that costs more to repair than it’s worth.” This means that if your car is worth $8,000 but the estimated cost to repair it after an accident is around $10,000, the car is likely totaled because the cost to repair it exceeds its worth.

In order to determine this, your insurance company will usually inspect the vehicle and have auto mechanics provide estimates for the repairs. When the repair costs start to climb too high and go over a specific percentage, the insurance company will determine it as a total vehicle loss. In states like Oklahoma, if the cost of repairing a vehicle nears 65% of the vehicle’s actual cash value, the vehicle can be deemed a total loss.

What should I do if I’ve received a lower amount than I deserve from State Farm for my totaled vehicle in Oklahoma?

If you have received a lower amount of money than you deserve from State Farm after a total vehicle loss, the Tulsa car accident lawyers from Biby Law Firm are here to help you. Our team has helped many clients who have been involved in car accidents and had to deal with less-than-forthcoming insurance companies. We know and understand the laws surrounding car accidents and car insurance as well as the tricks and tactics that these companies frequently use, which means that we can help you determine if you have received a fair amount based on your policy details. Our experience handling bad faith actions against insurance companies also works to your advantage.

The Tulsa car accident attorneys at Biby Law Firm will help you file a lawsuit and collect evidence showing that you were not given the appropriate amount of money for your total vehicle loss. If a fair settlement cannot be reached, we will prepare to represent you in court. However, if you believe that you are truly a victim of this scheme committed by State Farm, it is crucial that you do not delay getting the legal assistance that you need. Call our office or contact our firm to schedule your free, no-obligation consultation today. We will sit down with you, look over the facts of your claim, and help you create a clear plan to obtain the money you deserve for your total vehicle loss as soon as possible.