Allstate must face claims it underpaid property damage payments

Allstate class action lawsuit overview:

• Who: Allstate Vehicle and Property Insurance Company must face a class action lawsuit alleging it underpaid policyholders for property damage claims.
• Why: An Arizona federal judge denied Allstate’s motion to dismiss the class action lawsuit.
• Where: The Allstate payment class action lawsuit was filed in Arizona federal court. 

An Arizona federal judge has refused to dismiss an Allstate class action lawsuit alleging the insurance company underpaid policyholders for property damage claims.

The Allstate class action lawsuit challenges the insurer’s method of calculating actual cash value payment obligations for structural property losses. 

Plaintiffs Peter and Naomi Shumway initially filed the Allstate class action lawsuit in April 2023, and added Lillie Hernandez as a plaintiff in August 2023. About a month later, the Shumways voluntarily dismissed their claims.

Hernandez subsequently filed an amended Allstate class action lawsuit omitting the Shumways’ claims.

Plaintiff says Allstate payment improperly calculated depreciated labor costs

Hernandez had an Allstate insurance policy covering certain losses to her home. She says her policy did not include a labor permissive form, which would expressly permit depreciation of future labor. Her policy allegedly does not allow for the withholding of labor of depreciation for any portion of her property loss.

When her home was damaged in August 2022, she submitted a claim requesting payment from Allstate for the covered loss. However, when adjusting her claim, Allstate allegedly withheld the costs for materials and labor needed to repair the structure as “depreciation.” As a result of this calculation, Hernandez says Allstate breached its obligations under her policy and underpaid her.

Allstate filed a motion to dismiss, arguing the Shumways and Hernandez lacked standing to sue and the Allstate class action lawsuit was filed past the policy’s statute of limitations.

U.S. District Judge Douglas L. Rayes disagreed, finding the Shumways and Hernandez all had standing to sue over the alleged Allstate payment claims. The judge determined their claims were not time-barred even though they were filed outside of the policy’s one-year limitations period, finding “the mere late filing of a claim is an insufficient basis for enforcing the policy’s limitation period.”

What do you think about the alleged Allstate payment reduction for depreciation of future labor costs on property damage claims? Let us know in the comments.

Hernandez is represented by J. Brandon McWherter of McWherter Scott Bobbitt PLC and Michaile J. Berg of Berg Law PLLC.

The Allstate payment class action lawsuit is Peter Shumway, et al. v. Allstate Vehicle and Property Insurance Co., Case No. 2:23-cv-00699-PHX-DLR, in the U.S. District Court for the District of Arizona.

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