A federal judge in Illinois reaffirmed her decision to allow a class action lawsuit against State Farm to move forward, centering on claims that the insurance giant systematically undervalued and underpaid policyholders for totaled vehicles.
The decision comes despite State Farm’s attempts to have the case dismissed. U.S. District Judge Virginia Kendall acknowledged she should have considered the merits of the insurer’s arguments but ultimately found the plaintiffs’ fraud claims sufficient to proceed.
In her ruling Aug. 21, Kendall stated that although she previously mischaracterized State Farm's dismissal motion as procedurally improper, she remains convinced the plaintiffs have sufficiently pled their case.
The suit alleges State Farm's use of a typical negotiation adjustment led to the undervaluation of policyholders' vehicles, a practice plaintiffs argue was both deceptive and detrimental to their financial interests.
Kendall further clarified that the insurer’s challenge, which targeted claims from 26 non-residents based on choice-of-law arguments, is better suited for the class certification stage rather than an outright dismissal. She noted the plaintiffs have provided adequate allegations to support their claim that State Farm’s actions could mislead a reasonable consumer into purchasing inadequate coverage.
The lawsuit, filed in March 2022, is one of several ongoing federal cases against State Farm that challenge the company’s vehicle valuation practices. The plaintiffs contend that if they had been aware of the insurer's typical negotiation adjustments, they either would not have purchased the insurance or would have negotiated for lower premiums.
The case continues to proceed in the U.S. District Court for the Northern District of Illinois.
