State Farm’s Class Action Lawsuit

Find out more about State Farm’s Class Action Lawsuit.

“A proposed class action alleges State Farm Fire and Casualty Company, in an attempt to save money, has wrongfully used “new construction” numbers when generating through industry-standard software cost estimates for projects more properly considered “reconstruction,” resulting in the underpayment of policyholders’ claims.” (

Blake Zucker, Licensed Public Adjuster with Clarke & Cohen, states that “State Farm is improperly using the new construction feature in Xactimate instead of the reconstruction feature.  This causes them to purposefully underpay claims to their insureds.”

Xactimate is a widely used insurance claims estimating software in the insurance repair industry. It is specially designed for insurance adjusters.

“The new construction feature should be used when a building needs to be completely rebuilt from the foundation up. This should not happen when making repairs to a home that has salvageable materials remaining. Throughout the Xactimate program, the new construction feature offers a lower price than the reconstruction feature. This has allowed State Farm to save money on thousands, if not millions of claims,” continues Zucker.

“When you use a public adjuster, the adjuster can prove to State Farm which is the correct version of Xactimate to be used. If you do not understand the Xactimate program, which most people outside of the industry do not, you are most likely being taken advantage of by State Farm.  In turn, you will not be properly compensated.”

This is a high level issue which most adjusters on the ground have no control over. Without the knowledge a public adjuster brings to an insurance claim, the insured faces a very big disadvantage.

As the class action states, State Farm is in the business of “making money, not losing it,” therefore they have found a way to cheat their policyholders.

We will continue to update this issue as information becomes available.

For questions regarding a residential or commercial property loss, contact Clarke & Cohen, public adjusters in Philadelphia, South Jersey, Delaware, and over 20 other states nationwide.