Arkansas jury rules against State Farm for undervaluing totaled cars

In June 2025, an Arkansas federal court ruled in favor of Rose Chadwick and 37,000 other plaintiffs in a lawsuit against State Farm, a prominent car insurance company. Chadwick's case stemmed from an accident that occurred five years earlier when her daughter borrowed her 2011 Hyundai and was struck from behind, resulting in the car being declared a total loss. The case was initiated after Chadwick discovered discrepancies in the insurance compensation process related to the reimbursement calculation for totaled vehicles. Her attorneys argued that State Farm’s formula, which took into account the buyer's negotiation potential, was outdated and not aligned with current market pricing strategies. The jury found that the software used by State Farm to assess the value of totaled cars systematically underpriced these vehicles, affecting thousands of drivers across the U.S. Chadwick was determined to expose this unfair calculation, believing that her initial reimbursement for her totaled vehicle was unjust and not reflective of its actual worth. The jury concluded that she had been shortchanged by approximately $600, as her car had a replacement value of $4,700. In light of the jury's determination, State Farm announced changes in their processes for calculating the actual cash value of total-loss vehicles. They indicated a commitment to work closely with policyholders to ensure a fair assessment, considering factors such as the vehicle’s age, condition, equipment, and mileage at the time of loss. The company asserted that customers could provide additional information or opt for third-party appraisals, verifying their approach to reimbursements moving forward. The ruling has implications beyond Arkansas, as other states are examining similar claims against State Farm and other insurance providers, with attorneys launching cases in at least 19 different states to address these commonly used reimbursement methodologies. The contention revolves around whether these cases can be categorized under a class action lawsuit or must be treated individually. The outcome of these lawsuits holds potential consequences for how insurance companies evaluate total-loss vehicles and the broader landscape of insurance claim practices. Furthermore, this situation reflects a pressing legal challenge that could alter insurance reimbursement standards across the nation, prompting regulators and stakeholders to reassess existing methods used by insurers to value totaled vehicles.