UPDATE:
- The class includes all individuals who, between March 1, 2019, and the present, were insured under a property policy issued in California by State Farm, received reduced ACV benefits for a covered loss to real or personal property, and were paid less than their applicable policy limits, the ruling said.
- A California federal judge has certified a class of nearly 200,000 homeowners alleging State Farm underpaid property insurance claims in violation of state insurance codes.
- U.S. District Judge William Orrick ruled that the common issue of calculating actual cash value, or ACV, for property policies met all class requirements.
- The class action alleges State Farm depreciated sales tax when calculating ACV, in violation of California Insurance Code Section 2051(b).
State Farm class action lawsuit overview:
- Who: A California federal judge is to likely certify a class of nearly 200,000 homeowners in a lawsuit against State Farm.
- Why: The homeowners argue State Farm underpays property insurance claims by depreciating sales tax when calculating replacement costs.
- Where: The class action lawsuit is filed in California federal court.
A California federal judge has reportedly indicated he will likely certify a class of nearly 200,000 homeowners arguing State Farm underpaid property insurance claims by depreciating sales tax when calculating replacement costs.
The judge ruled the legality of State Farm’s practice regarding sales tax depreciation — which reduces “actual cash value” benefits — is a common issue that predominates in the complaint, reports Law360.
The judge also noted how he previously sided with plaintiffs in a similar case from 2017, during which he says his ruled policy and a California insurance code prohibit an insurer from making deductions aside from ones for “physical depreciation,” when calculating actual cash value.
State Farm, meanwhile, argued it properly calculated the “actual cash value” of the homeowners personal property, pursuant to the California Insurance Code.
The lead plaintiffs, married couple Dan Grout and Melissa Pitkin, filed a complaint to represent a California class of homeowners with a property insurance policy from State Farm.
Homeowner plaintiffs claim State Farm guilty of breach of contract
Counsel for State Farm reportedly argued there was not common evidence across the class to support class certification, due to alleged variances in policyholder data that would require class membership, liability and damages to undergo individualized review.
Counsel for Grout and Pitkin, meanwhile, claimed State Farm does not deny that it applies depreciation to sales tax and that the company does so to anyone who makes a claim, making the complaint “perfectly suited for class certification,” reports Law360.
The plaintiffs claim State Farm is guilty of breach of contract and breach of the implied covenant of good faith and fair dealing.
In a case last year, State Farm agreed to pay $2.09 million to put an end to claims it underpaid claims in Washington state by excluding “diminished value” payments.
Have you received a cash value benefits payment from State Farm that was reduced due to depreciation of sales tax? Let us know in the comments.
The State Farm class action lawsuit is Pitkin et al. v. State Farm General Insurance Co. et al., Case No. 3:23-cv00924, in the U.S. District Court for the California Northern District, San Francisco.
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21 thoughts onCalifornia homeowners win class cert. in lawsuit over State Farm Insurance payouts
In August to early September of 2024, State Farm Darell Shelton’s office and staff, upon scouting me to bundle my insurances, promised me the same coverage as I had with my previous home insurance, via email his agent confirmed that the quote was the exact same as my previous insurance policy HO3 Homeowner’s with Southern Oak (an amazing insurance company). It wasn’t. What they sold me was a unit owners’ insurance with over $300k dollars of in home “stuff insurance” like I was running an Art Gallery in my home!
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We recently had a major hail storm in Chicagoland area and we had damage to our home due to the hail. We filed a claim and did not receive anywhere near what we thought we were going to receive for the damage. We have a claim document that clearly shows a deduction for Less Depreciation (Including Taxes). Please contact me.
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We are State Farm policy holders who lost our home in the Palisades fire. After 5 months of no action, they provided a “full replacement value” estimate at $321/sq ft. Prior to the fire, construction costs averaged $700/sq ft and they have only increased. They got to this valuation by blatently omitting things like footings for the foundation, sewer connections, entire walls, etc. Now they refuse to “revisit” the estimate unless we get a contractor’s estimate. They are not acting in good faith, refuse to look at LA City code (even though we bought code ugrade), etc. We have told them they are in violation of state law requiring they provide an estimate for the full replacement cost and upgrades independent of whether we chose to rebuild or buy elsewhere. They simply do not reply, or say things are “on my manager’s deck.” State Farm has no ombudsman to complain to. Do we really have to file suit to get these scum bags to deliver on their contractual obligations under the law?
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We also had State Farm homeowners insurance for a hurricane with lots of damage. Our home was a total loss. We were already in shock and devastated but thankfully alive when State Farm really just gave us a terrible time for any and everything. After 50 something pages of loss we also were cheated out of lots of $. We weren’t given a hotel or adequate place to stay while homeless and we’re supposed to. Just craziness! What a dreadful and depressing 6 months of homelessness it was with no help from State Farm.
Please let me know when this happens. I got cheated out of thousands of dollars for damage to my home.
We had a tornado go through our town, Memorial Day, 2022. Our house got hit with straight line winds, we lost 10 trees. One took out the power line, that was laying across our deck. That caused a power surge that fried, 2 garage door openers, our furnace, our central A/C unit, stove, over stove microwave, water heater, and dishwasher. One of the other trees hit the other side of our deck, damaged our deck and metal roof.
State farm cheated us terribly. After our $2500.00 deductible, they paid us $4200.00!! Needless to say, my deck is still broke, I don’t have garage door openers, my roof is still damaged, but I finally have my yard almost cleared up and my appiances replaced.
Our house burn down to the ground I the Mosquito Fire on September 7th 2022. We have state farm insurance. I would say breach of contact is what state farm did to us. 🤬Very upset with how we were treated and things we were told. The whole experience sucked and left us feeling scammed! 🤬