Arkansas Jury Rules Against State Farm

Arkansas case sparks nationwide disputes over how insurers calculate totaled car payouts.

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Arkansas resident Rose Chadwick has become the face of a growing fight over how insurance companies calculate payouts when a car is deemed a total loss, particularly now that a jury has ruled, in her case, against State Farm. The case began with a wrecked 2011 Hyundai and has now spread into courtrooms across the country, raising questions about how much money drivers are actually owed when their cars cannot be repaired. Chadwick, first believed that the payment offered by her insurer was fair. She assumed the company had followed standard practice and provided the right amount to replace her car. Only later did she learn that thousands of drivers were challenging the same calculation method, arguing it consistently undervalued cars and left policyholders shortchanged.

Her attorneys argued that State Farm relied on computer software to decide what a replacement car was worth. That program, they claimed, built in a discount for haggling with used car dealers. According to the lawsuit, this assumption did not match the way most people actually buy cars in today’s market, where prices are often fixed and negotiations limited. By applying this discount, the payout was automatically lowered, meaning drivers often received hundreds of dollars less than what it would cost to buy a comparable vehicle.

A federal jury in Arkansas sided with Chadwick and nearly 40,000 others in June, ruling against State Farm. The jury decided that the method used to value her Hyundai was unfair and that she had been underpaid by about $600 on a car valued at $4,700. Though the difference may sound small, the case represents how even modest gaps can add up when multiplied across thousands of claims nationwide.

State Farm, one of the largest auto insurers in the country, has defended its process. In a statement, the company insisted that it always seeks to pay what is owed under the policy terms and that customers are given the chance to present their own information or request an independent appraisal. Company officials also pointed out that the software in question is no longer in use and argued that the approach had been common among insurers at the time.

The company has also pushed back against the idea of handling these disputes as class actions. Courts in different states have issued mixed rulings, with some finding that each payout dispute must be judged individually, while others have allowed groups of policyholders to sue together. This legal split has left the future of similar lawsuits uncertain, but cases continue to be filed in at least 19 states.

For Chadwick, the case began in 2020, when her daughter borrowed the car and was struck from behind during an early morning drive. Afterward, Chadwick received the settlement offer and accepted it, not realizing the issue would stretch on for years. A social media post eventually alerted her to the wider fight over how payouts were calculated. That discovery turned her into the lead plaintiff in a battle against one of the most powerful insurance companies in the country.

Her attorney, Brian Glasser, noted that the outcome of these cases involves far more than one family’s settlement. He pointed out that the software in question influenced billions of dollars in payments every year, affecting countless drivers across the nation. The Arkansas ruling, he argued, shows that the system was designed in a way that cut down on payouts at the expense of policyholders.

Regulators in several states are now weighing whether insurers need to adjust the way they value cars that are declared total losses. The outcome of these reviews could reshape how payouts are determined in the future, especially as more consumers raise concerns about the fairness of automated valuation tools.

Chadwick has said her motivation was never simply about money. For her, the case represented a matter of fairness. She described the practice as a hidden cut in value that should not have been allowed. While her jury award may not change the past, her case has drawn national attention to a practice that many drivers never realized was affecting them.

Sources:

Arkansas woman wins court challenge over insurance payout for a “totaled” car

Jury Finds Insurance Company Short Changed Payouts For Totaled Cars