State Farm $15.58M Settlement for Underpaid Arkansas Total Loss Claims

When an insured vehicle is deemed a “total loss,” auto insurers generally pay the vehicle’s actual cash value—often based on appraisal tools and comparisons to similar vehicles. In this class action, Arkansas State Farm Mutual Automobile Insurance Co. customers whose cars were declared total losses between Nov. 29, 2016, and Oct. 18, 2021 alleged that State Farm underpaid them by using a method that applied a “typical negotiation adjustment” to the value of comparable cars in a way that resulted in less compensation than they said the policies promised. The settlement resolves the dispute, and eligible class members may receive an average payment of about $489, calculated as 68% of the “typical negotiation adjustment” amount tied to their claim as reflected in State Farm’s records. The lawsuit—Chadwick v. State Farm—was filed to challenge how State Farm valued total loss vehicles for Arkansas policyholders, with the claim that the insurer breached insurance contracts and the implied covenant of good faith and fair dealing. Its significance lies in forcing greater scrutiny of insurer valuation practices, including the use of third-party valuation software like Audatex and the consistency of the adjustments applied to “comparable” vehicles. Broader implications extend to how total loss payments are determined across the industry, particularly in relation to state insurance regulations that require fair, reasonable claim handling and accurate valuation, and to the wider pattern of similar litigation targeting how insurers use valuation models and discounts; under this settlement, customers who fit the criteria and file by Aug. 19, 2026 can seek compensation from a $15.58 million fund without State Farm admitting wrongdoing