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State Farm Mutual Auto Insurance Underpayment of Wage Benefits Class Action

If a person is injured in a car accident, what must the auto insurance company pay for lost earnings due to the accident? The complaint for this class action alleges that State Farm Mutual Automobile Insurance Company makes calculations that are improper under New York state’s insurance laws and pays accident victims less than they are entitled to.

On July 31, 1999, plaintiff Jose Manrique was in an accident. At the time, he was riding in a Toyota that was insured by State Farm Mutual Automobile Insurance Company. After the accident, he applied for the First Party Benefits included in the policy. His wages at the time were around $3,425.

State Farm paid benefits for a while, but terminated them on June 25, 2020, claiming they had been exhausted. The complaint alleges that he was underpaid and is still owed benefits

At issue here is the calculation of amounts for Basic Economic Loss and First Party Benefits under New York’s Comprehensive Automobile Insurance Reparations Act.

Under Basic Economic Loss (§ 5102(a)(2) of the law), Manrique should have been entitled to up to $50,000 for medical expenses and wages; wages are defined as “Loss of earnings from work which the person would have performed had he not been injured” with a cap of $2,000 per month for the three years after the accident. The policy on the Toyota included this Basic Economic Loss coverage, with its $50,000 in benefits, plus Optional Basic Economic Loss coverage, with another $25,000 in benefits.

Under First Party Benefits (§ 5102(b) of the law), however, the complaint says, Manrique “is entitled to be reimbursed from the Basic Economic Loss coverage, with wages calculated as ‘payments to reimburse a person for basic economic loss,’ i.e., loss of actual earnings, LESS ‘Twenty percent of lost earnings,’ again capped at $2,000 per month.”

The complaint claims that State Farm paid Manrique $49,214.90 in First Party medical benefits and $14,444.08 in First Party Wage Benefits over five months “and took a credit of $4,420 in New York State Disability benefits and $2,648 in Social Security benefits…” This adds up to a total of $70,726.98.

The complaint alleges that State Farm’s “conclusion that Basic Economic Loss coverage of $75,000.00 had been exhausted was based upon [State Farm’s] improper reduction of Basic Economic Loss by more than the statutorily capped amount of $2,000.00 per month for wages as provided by (§ 5102(a)(2).”

The class for this action is all Eligible Injured Persons (as defined by 11 NYCRR §§ 65-1.1-65-1.3) covered under a State Farm Mutual Automobile Insurance Company policy and subject to Insurance Law §5102, who had monthly wages of more than $2,000 per month, who have made claims for and received First Party Benefits including claims for lost wages “and which, after paying at least one month of first party wage benefits, January 12, 2015” [sic]. (Note that the lack of clarity at the end is in the original class definition on page 6 of the complaint.)

Article Type: Lawsuit
Topic: Insurance

Most Recent Case Event

State Farm Mutual Auto Insurance Underpayment of Wage Benefits Complaint

January 11, 2021

If a person is injured in a car accident, what must the auto insurance company pay for lost earnings due to the accident? The complaint for this class action alleges that State Farm Mutual Automobile Insurance Company makes calculations that are improper under New York state’s insurance laws and pays accident victims less than they are entitled to.

State Farm Mutual Auto Insurance Underpayment of Wage Benefits Complaint

Case Event History

State Farm Mutual Auto Insurance Underpayment of Wage Benefits Complaint

January 11, 2021

If a person is injured in a car accident, what must the auto insurance company pay for lost earnings due to the accident? The complaint for this class action alleges that State Farm Mutual Automobile Insurance Company makes calculations that are improper under New York state’s insurance laws and pays accident victims less than they are entitled to.

State Farm Mutual Auto Insurance Underpayment of Wage Benefits Complaint
Tags: Auto Insurance, Incomplete payment of benefits due, Insurance, Lost wages