IF YOU ARE A CALIFORNIA STATE FARM PROPERTY POLICYHOLDER WHO MADE A CLAIM(S) FOR PERSONAL PROPERTY FROM DECEMBER 31, 2004 THROUGH MAY 19, 2014 FOR ACTUAL CASH VALUE AND WERE NOT PAID YOUR POLICY LIMIT, YOU MAY BE ENTITLED TO SHARE IN THE PROCEEDS OF THE SETTLEMENT DESCRIBED IN THE RECONSIDERATION NOTICE. TO CLAIM YOUR SHARE OF THIS SETTLEMENT, YOU MUST RETURN THE POSTCARD INCLUDED WITH THE OFFER OF RECONSIDERATION POSTMARKED ON OR BEFORE OCTOBER 1, 2018.
This settlement comes after 10 years of hard-fought litigation on behalf of State Farm insureds against State Farm because State Farm was failing to properly value and pay insureds for their personal property. As a result of this settlement all insureds who make a claim and whose property was over depreciated will receive the full amount they were entitled to plus interest. And State Farm is not allowed to offset by claiming that it overpaid on other items.
The litigation included a full class trial against State Farm that established that State Farm was breaking the law, and a published Court of Appeal decision finding that policyholders have the right to hold State Farm accountable for illegal adjustment conduct and are not limited to an appraisal remedy. The policyholders proved at trial that State Farm Fire & Casualty, under homeowner, commercial, and rental policies, failed to lawfully calculate depreciation on personal property losses suffered by its insureds on settlements where the insured opted not to replace a damaged item. The Court also agreed with the policyholders and declared that State Farm failed to document each of the insureds’ claim files and to inform its insureds in writing the complete basis upon which any depreciation had been taken on the items it depreciated during the adjustment process. This was also a violation of California law. The time frame for this unlawful practice includes from late 2004 until approximately the mid-summer of 2014, and has involved as many as 89,000 policyholders who made claims.
Insureds will often replace some or all of their damaged items and will be reimbursed the actual replacement cost for them. This lawsuit addressed only the cash payouts for items that insureds elected not to replace during this time frame. For items that insureds elected not to replace, the insureds are entitled to receive the “Actual Cash Value” of the item from State Farm. This is calculated by determining an item’s new retail replacement cost at the time of loss, less reasonable depreciation based upon the physical condition of the item at the time of loss.
State Farm was found to have routinely ignored an item’s “condition”, and instead often used only an item’s age when determining the amount of depreciation to deduct from the new replacement cost of a damaged item. State Farm was found to have used a “depreciation guide”, which lists most typical household goods and then arbitrarily forecasts a useful work life for each type of item, and also assumes that item was used regularly and is of average quality. It is non-specific and can be extremely unfair in many instances.
At the core of the litigation was State Farm’s practice of ignoring the actual condition of items and instead just focusing on age. Of the hundreds of claim files reviewed in this litigation, very few showed any reference to the condition of any of the insureds’ items, as it was State Farm’s adjustment practice to calculate depreciation based upon an item’s age, rather than on its condition, at the time of loss.
So for insureds who lost their formal dining table that was used perhaps only once or twice per year, or a formal sofa that was in very good condition and used seldomly, State Farm would typically deduct from the insurance payout the maximum depreciation of 80%, even if the item was only a few years old, rather than say 25% or 30%, that would have properly reflected the very good condition of the table and sofa at the time of loss.
The Santa Clara County Superior Court declared State Farm’s practice to be unlawful to the extent that it calculated depreciation exclusively on an item’s age, without consideration of its physical condition at the time of loss.
The Court also declared that State Farm was obligated to do so, but failed to properly document the condition of the insureds’ items in the claim file and also failed to provide the insured, in writing, with the complete basis upon which it calculated depreciation on any property item where depreciation was taken. (To see the full content of the Court’s declaratory relief trial ruling click here).
A resolution between the policyholders and State Farm has been reached following the Phase I declaratory relief trial where the policyholders prevailed in their claim. Accordingly, State Farm insureds (you) may now resubmit any item(s) of loss, where they believe that State Farm may have applied excessive depreciation to the items without fairly considering the pre-loss condition of their damaged property. This is a simple process which begins with you submitting a postcard you should have received in the mail along with the mailed notice describing the settlement.
As the legal representatives of the class of policyholders, we highly encourage you to review this website, and if you have questions to contact us by email at email@example.com so that your questions can be answered. You may also call 1-888-377-9637. Many State Farm insureds may be “happy" with the way in which their loss was adjusted, and not realize that their loss was not adjusted in accordance with California law and that they are owed additional money. In many circumstances, the insured’s contentment is based upon false assumptions and a lack of understanding of their legal rights.
|YOUR LEGAL RIGHTS AND OPTIONS IN THIS SETTLEMENT|
|ACTIONS YOU MAY PURSUE||EFFECT OF TAKING THIS ACTION|
|RETURN THE OFFER OF RECONSIDERATION POSTCARD POSTMARKED NO LATER THAN OCTOBER 1, 2018||This is the only way to get a cash payment from the Settlement.|
|OBJECT TO THE SETTLEMENT BY SUBMITTING A WRITTEN OBJECTION POSTMARKED NO LATER THAN October 1, 2018.||Write to the Court and explain why you do not like the Settlement and/or the request for attorneys’ fees and expenses.|
|GO TO THE HEARING ON FEBRUARY 8, 2019 at 10:00 A.M., AND FILE A NOTICE OF INTENTION TO APPEAR SO THAT IT IS POSTMARKED NO LATER THAN OCTOBER 1, 2018.||Ask to speak in Court about the fairness of the Settlement and/or the request for attorneys’ fees and expenses.|
|DO NOTHING.||You will not be eligible to receive a payment from the Settlement.|