An Arkansas court has granted preliminary approval for an approximately $15.58 million settlement from State Farm in a class action lawsuit that accused the carrier of undervaluing totaled vehicles.

The lawsuit was originally filed by Rose Chadwick in the Eastern District of Arkansas in 2021. In it, Chadwick sought to represent State Farm insureds in Arkansas who received a claim payment for the total loss of a vehicle, where the actual cash value was determined using valuation reports prepared by Audatex North America. The suit claims that by using Audatex reports, State Farm "systemically thumbs the scale against its insureds" when determining ACV by applying typical negotiation adjustments.

The suit stated, in part: "Instead of using the internet list price of comparable vehicles, State Farm improperly reduces that price, and in turn the valuation amount, by applying Typical Negotiation Adjustments without any documentation that the assumed discount was available. These adjustments are based on the factually erroneous assumption that, during the Class period, insureds would be able to negotiate a reduction in the list price of comparable used automobiles, which during the Class period would be highly atypical and contrary to the modern used car industry's market pricing and inventory management practices."

Chadwick's complaint claimed these adjustments are contrary to appraisal standards and methodologies that reject arbitrary adjustments not backed by observed and verifiable data.

Chadwick's suit eventually went to jury trial, where she prevailed on behalf of the class.

A court order granting preliminary approval for the settlement was signed by U.S. District Judge D.P. Marshall Jr. on March 27, 2026. It explains, "This case has been long and hard-fought. After Rose Chadwick (individually, and as class representative) prevailed (subject to a carve-out of State Farm's waiver defense) in a jury trial, and the parties completed further targeted discovery on issues about the carve-out, she and State Farm settled on all issues. Because this is a class action, the Court must approve any settlement."

The court also set the settlement class as: "All persons who made a first-party claim on a policy of insurance issued by State Farm Mutual Automobile Insurance Company to an Arkansas resident where, from November 29, 2016, through October 18, 2021, State Farm Mutual Automobile Insurance Company determined that the vehicle was a total loss and based its claim payment on a report from Audatex where a typical negotiation adjustment was applied to at least one comparable vehicle."

The court order states State Farm has agreed to pay attorney's fees, litigation costs and the service award, and to separately reimburse class counsel for notice and administration costs.

"The settlement doesn't constitute an admission, concession, or indication by the parties of the validity of any claims or defenses in the action or of any liability, fault, or wrongdoing of any kind by State Farm," the order notes. "State Farm vigorously denies all the claims and allegations raised in this case."

The final approval hearing for the settlement is scheduled for July 15.

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