Class Action Suit Filed Against State Farm for Violation of "Make Whole Rule" - BodyShop Business

Class Action Suit Filed Against State Farm for Violation of “Make Whole Rule”

A class action lawsuit was filed today in United States Federal Court, Central District, alleging that State Farm is enriching itself with payments rightfully belonging to its insureds in violation of California law, particularly the "Make Whole Rule."

When State Farm policyholder Stuart Chandler of Fresno, Calif., was rear-ended, his personal automobile insurance policy entitled him to a rental car while his car was being fixed. Under Chandler’s auto policy, State Farm paid 80 percent of the $317.45. Chandler was charged for his rental car, leaving Chandler to pay 20 percent, or $63.49, in out-of-pocket expenses.

State Farm then went to the other party’s insurance company to collect the money it had paid out to Chandler. That insurance company reimbursed State Farm $70 for the rental car. The complaint alleges that pursuant to California’s "Make Whole Rule," State Farm should have refunded Chandler from that amount the $63.49 for out-of-pocket expenses he incurred before it could retain any of those funds for itself. Instead, the complaint alleges, State Farm kept the full amount for itself, ignoring the fact that Chandler has not been fully compensated for his loss as required by law.

"California common law provides that when a policyholder suffers a loss from a car accident, the policyholder must be reimbursed for all of his losses before State Farm has a right to reimbursement for any money it paid out under its policy," says Long Beach, Calif. plaintiff attorney Stephen M. Garcia of The Garcia Law Firm.

This rule is known as the "Make Whole Rule," and is a common law exception to an insurance company’s subrogation right. The "Make Whole Rule" basically states that before any of the recovery is allocated to the insurer, the insured who suffered the loss must be fully compensated for all the elements of damages, not just those for which the insurer has indemnified the policyholder.

According to State Farm’s Web site, the company insures more cars any other insurer in the United States and handled 12.3 million total claims in 2007.

"Mr. Chandler’s case is just $63 and change," says Garcia. "Imagine $63 times the tens of thousands of claims State Farm handles in California alone. We believe that State Farm is enriching itself with money that rightfully belongs to its policyholders."

You May Also Like

Cruise Postpones Release of Driverless Taxi Service

Cruise, a GM subsidiary, recently announced that it will miss its goal of launching a large-scale self-driving taxi service in 2019.

Cruise, a GM subsidiary, recently announced that it will miss its goal of launching a large-scale self-driving taxi service in 2019. Cruise CEO Dan Ammann said the company plans to dramatically increase the number of its autonomous test vehicles on the road in San Francisco, but will not be offering rides to regular people this year, according to an article from The Verge.

Cutting Edge Automotive Solutions Partners with Andretti Rallycross

Andretti Rallycross announced that Cutting Edge Automotive Solutions will serve as technical partner on Cabot Bigham’s No. 02 OINK Clothing Beetle for the remainder of the 2019 Americas Rallycross season, showcasing their SP Tools USA brand.

Ford, Volkswagen Expand Collaboration to Include Autonomous, Electric Vehicles

Ford Motor Company and Volkswagen AG announced they are expanding their global alliance to include electric vehicles – and will collaborate with Argo AI to introduce autonomous vehicle technology in the U.S. and Europe.

CCAR Updates Website with More OSHA Alliance Resources

CCAR (Coordinating Committee For Automotive Repair) has announced the addition of new Occupational Safety and Health Administration (OSHA) Alliance content on its main website,

CARSTAR McLaren Lake Forest and CARSTAR McLaren Irvine Open in California

Owned by husband-and-wife team James and Mary Davis, CARSTAR McLaren Lake Forest and CARSTAR McLaren Irvine are a family business.

Other Posts

CIECA to Offer Webinar on What Businesses Need to Know to Implement CIECA Standards

CIECA will hold its next CIECAst webinar, “Implementing CIECA Standards: Implementation Guide and Appendix C – BMS, Code Lists and Shema Components,” on Tuesday, Dec. 11, 2018 at 11 a.m. CST.

CARSTAR Urges Customers to Stay Winter Ready

Cold weather can create some of the harshest driving conditions of the year. The months between October and February top the list for accidents, vehicle damage and injuries.

CIECA Adds Broadly as Corporate Member

The Collision Industry Electronic Commerce Association (CIECA) announced that Broadly has joined CIECA as a corporate member.

NABR Launches BillableGenie Online Searchable Database of Insurer-Paid Not-Included Procedures

National AutoBody Research (NABR) has announced the launch of its BillableGenie online service, an independent, centralized source of actual data on insurer paid not-included procedures and operations, labor rates, labor rate concessions and other manually entered estimate line items.