Total loss undervaluation lawsuit filed against State Farm in North Carolina

In a similar complaint to those filed in six other states, a North Carolina State Farm policyholder has brought a class action lawsuit against the insurance company over an alleged undervalued total loss.

In plaintiff Craig Brewer’s case, State Farm’s alleged reduction of the retail cost of comparable vehicles reduced his total loss payout by 5.5%. For each of the class members, the suit alleges that State Farm reduced their total loss payouts by 4–9%.

“[T]he plaintiff only contests State Farm’s blanket reduction of the retail cost of comparable vehicles on behalf of himself and the class,” the suit states. “Therefore, none of the total loss vehicles have to be revalued. The plaintiff is only seeking on behalf of himself and others the return of the line item impermissible deduction, which violates North Carolina law.”

The class policyholders were paid by State Farm using a CCC One Market Valuation Report, according to the suit.

The complaint alleges violations of North Carolina’s Unfair Trade Practices Act. Brewer claims an individual breach of contract.

Separate class action suits have also been filed on behalf of policyholders in Alaska, Illinois, Kentucky, Mississippi, Tennessee, and West Virginia. Cases in Kentucky and Mississippi were thrown out earlier this month.

In the North Carolina case, Brewer seeks declaratory relief and compensatory damages “resulting from State Farm’s systematic and uniform practice of reducing the retail cost of comparable vehicles used in the calculation of total loss claim payments in violation of North Carolina’s motor vehicle total loss regulation.”

The lawsuit stems from a collision involving Brewer’s 2021 Genesis GV80 AWD in Charlotte, North Carolina, on April 24, 2023.

The CCC One report stated the pre-accident “base vehicle value” of the vehicle was $56,772, on which State Farm based its payment to Brewer. The suit alleges that, in violation of North Carolina’s total loss regulation, State Farm reduced the retail cost of comparable vehicles used in the calculation, resulting in the total loss claim payment being reduced by $3,328.

“Simply stated, under North Carolina’s total loss regulation, State Farm is permitted to apply an adjustment for the condition of the total loss vehicle, but is not permitted to adjust the retail price of the comparable vehicles in calculating the value of the total loss claim.

“State Farm made no adjustment for the condition of Plaintiff, Craig Brewer’s total loss vehicle… But, despite the clear language of North Carolina’s total loss regulation, rather than using the ‘retail cost’ of comparable vehicles as required, State Farm reduced the retail price of the comparable vehicles by setting each comparable vehicle to ‘Average Private condition.’ This function of State Farm’s total loss valuation methodology using its customized CCC One platform is automated and results in a blanket reduction of the retail price of each comparable vehicle by the same amount.”

The suit also alleges that while State Farm calls the reduction a “condition adjustment,” it’s not tied to the condition of the comparable vehicles or the total loss vehicle. Before arriving at a “base vehicle valuation,” State Farm allegedly “systematically and uniformly” reduced the retail cost of each comparable vehicle by $3,328.

“Applying this mislabeled deduction to total loss claims is State Farm’s routine business practice, and plaintiff contests this illegal deduction on behalf of himself and the class members,” the suit states.

Class members are all persons, businesses, and entities insured by State Farm Mutual Automobile Insurance Co. on a North Carolina automobile policy that received compensation on a claim for the total loss of their vehicles from State Farm based on a total loss valuation generated using a CCC One Market Valuation Report, wherein the retail cost of comparable vehicles was reduced.

As of Friday afternoon, State Farm had not yet filed a response to the lawsuit in court.

Tennessee State Farm case moves forward

Another similar total loss valuation class action suit filed against State Farm in Tennessee will continue.

State Farm appealed the certification of the class. According to an Oct. 9 U.S. Sixth Circuit of Appeals opinion, the court affirmed the district court’s class certification and remanded the case for further proceedings.

The suit was first filed in May 2020 by Jessica Clippinger. An amended complaint was filed on June 3. The case was moved to federal court, and State Farm’s motion for summary judgment was denied; however, its motions for appraisal and a stay pending appraisal were granted. Audatex is also a named defendant in the case.

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