David Miles et al v. State Farm Fire and Casualty Company

On September 6, 2023, plaintiff David Miles, along with other policyholders, filed a class action lawsuit against State Farm Fire and Casualty Company in the United States. The complaint alleges that State Farm systematically underpaid claims for water damage to residential properties by applying a depreciated labor cost methodology. The plaintiffs contend this practice breaches the insurance contract's terms, which promise to cover the full cost to repair or replace damaged property with similar materials and workmanship, without arbitrarily reducing labor expenses. The case challenges the insurer's claims-handling procedures and seeks compensatory damages, declaratory relief, and an injunction to change State Farm's payment practices for affected policyholders.

The case is in its early stages as of the filing date in September 2023. No final judgment, settlement, or class certification ruling has been reported.

The central dispute is whether an insurer, under standard property insurance policies, is permitted to depreciate the cost of labor when calculating actual cash value payments for water damage claims, or if depreciation should be limited to materials only.

This case is part of a broader national legal debate over insurers' use of depreciated labor costs, a practice that significantly reduces claim payouts. A ruling against State Farm could compel industry-wide changes in claims adjustment and lead to larger settlements for policyholders, reinforcing consumer protections in property insurance.