The State Farm Mutual Automobile Insurance Company offers auto insurance policies in Minnesota that say that, in the event of a total loss, the company will give the insured a payout consisting of the actual cash value (ACV) of the vehicle minus the policy’s deductible. The complaint alleges that State Farm does not do this, because it subtracts an extra amount from the ACV “to account for typical negotiation,” which the complaint alleges results in an underpayment to the insured.
The class for this action is all State Farm insureds (1) with Minnesota first-party personal line policies issued in Minnesota (2) who received compensation, between April 15, 2016 and April 15, 2022, for the total loss of their own vehicles under their First Party coverages, and (3) whose claim was settled using the amount determined by a total loss valuation from Audatex based on the value of comparable vehicles which included a deduction or adjustment for a “typical negotiation.”
The plaintiff in this case, Yasmin Varela, was involved in an accident on or around January 6, 2021. State Farm, her insurer, declared the vehicle a total loss.
To calculate the ACV of Varela’s vehicle, the complaint alleges, State Farm used a valuation report provided by third-party vendor Audatex, created by a software program called Autosource Market-Driven Valuation (AMDV).
According to the complaint, the Autosource software finds online prices for comparable vehicles in the appropriate market, then adjusts them for differences in equipment, mileage, and configuration. “In addition, however,” the complaint alleges, “the valuation reports used by State Farm make a further downward adjustment to each comparable vehicle for a non-itemized, so-called ‘typical negotiation’ deduction…”
The valuation report for Varela’s vehicle shows four comparable vehicles, and deducts $680, $720, $639, and $640, respectively, from their valuations.
State Farm claims that this represents the amount for which dealers will be willing to sell the vehicles. But the complaint claims, “Neither State Farm nor any of its agents speak with any of the car dealers who they represent are willing to reduce the price of the comparable vehicle.”
Also, the complaint claims the “8%-9% reduction on a used vehicle’s internet price is not typical and does not reflect market realities.”
In the current market, the complaint alleges, “used car dealers price their cars to market and utilize sophisticated pricing and inventory management tools to remain competitive. Thus … it would be atypical for a consumer to negotiate a discount off a car’s internet advertised price.” In fact, due to the Covid-19 pandemic and supply chain problems, used vehicles may now be sold at higher than the listed prices.
The complaint alleges, “State Farm is not authorized to take these downward ‘typical negotiation’ deductions under either the governing insurance policy or under applicable Minnesota law.”
Article Type: LawsuitTopic: Insurance
Most Recent Case Event
State Farm Mutual “Typical Negotiation” Deductions from ACV Minnesota Complaint
April 15, 2022
The State Farm Mutual Automobile Insurance Company offers auto insurance policies in Minnesota that say that, in the event of a total loss, the company will give the insured a payout consisting of the actual cash value (ACV) of the vehicle minus the policy’s deductible. The complaint alleges that State Farm does not do this, because it subtracts an extra amount from the ACV “to account for typical negotiation,” which the complaint alleges results in an underpayment to the insured.
State Farm Mutual “Typical Negotiation” Deductions from ACV Minnesota ComplaintCase Event History
State Farm Mutual “Typical Negotiation” Deductions from ACV Minnesota Complaint
April 15, 2022
The State Farm Mutual Automobile Insurance Company offers auto insurance policies in Minnesota that say that, in the event of a total loss, the company will give the insured a payout consisting of the actual cash value (ACV) of the vehicle minus the policy’s deductible. The complaint alleges that State Farm does not do this, because it subtracts an extra amount from the ACV “to account for typical negotiation,” which the complaint alleges results in an underpayment to the insured.
State Farm Mutual “Typical Negotiation” Deductions from ACV Minnesota Complaint