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Class Action Challenging State Farm’s Payout Formula Proceeds

March 31, 2020, 12:16 AM

A class action lawsuit challenging the way State Farm pays out claims to homeowners was properly allowed to proceed because language in the contract was ambiguous, the Fifth Circuit ruled Monday.

After a storm damaged her home, Lorine Mitchell filed a claim seeking the “actual cash value” of the damaged portion, as per the terms of her homeowners policy with State Farm.

State Farm paid out $646.19 under its own in-house calculation, which included depreciation of the materials and labor used to replace the damaged part of the home.

Mitchell argued that State Farm should have applied depreciation to the...

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