State Farm Sued in NC for Undervaluing Car Claims
A North Carolina policyholder has filed a class action lawsuit accusing State Farm Mutual Automobile Insurance Company of systematically undervaluing total loss car claims, potentially shortchanging thousands of drivers statewide.
The complaint, filed by Craig Brewer, claims that State Farm used the CCC One Market Valuation Report software to undervalue cars in total loss claims.
According to the filing, the system reduced the retail value of comparable vehicles by as much as 9%, resulting in smaller payouts for policyholders.
Mr. Brewer alleges this practice violates North Carolina’s Total Loss Regulation and the Unfair and Deceptive Trade Practices Act.
What Is a Total Loss Claim and Why Does It Matter?
A total loss claim occurs when the cost to repair a damaged vehicle is higher than the car’s fair market value before the accident.
In such cases, the insurer declares the vehicle a total loss and issues a settlement based on what the car was worth immediately before the crash.
That valuation is supposed to reflect the true retail value of a comparable vehicle in the same local market.
However, disputes often arise over how insurers determine that figure, especially when automated valuation tools are used behind the scenes.
Even a small downward adjustment in value can translate into thousands of dollars in reduced payouts for policyholders.
For more on how automation affects insurance decisions, see Ghosted by Your Insurer? The Truth Behind Instant Claim Rejections.
The central question in this lawsuit is whether State Farm, through its use of CCC One software, unlawfully manipulated that valuation process, effectively underpaying claimants across North Carolina.
Plaintiff Says His Payout Was Cut by 5.5%
Mr. Brewer’s lawsuit stems from an April 2023 accident involving his 2021 Genesis GV80 AWD in Charlotte.
After the crash, State Farm valued the SUV at $56,772, then deducted $3,328 roughly 5.5% under what it called a “condition adjustment.”
The suit argues this deduction was neither lawful nor tied to the actual condition of the vehicle.
It further claims that State Farm applies the same automated deduction to every total loss valuation generated through CCC One, creating a “blanket reduction” that violates North Carolina law.
Legal Basis: Breach of Contract and Unfair Trade Practices
The class action accuses State Farm of breach of contract, bad-faith insurance practices, and violations of North Carolina’s Unfair and Deceptive Trade Practices Act (UDTPA).
Under 11 NCAC 04.0418, insurers may adjust the value of a total loss vehicle only for its actual physical condition — not by altering the retail prices of comparable vehicles.
“Rather than using the retail cost of comparable vehicles as required, State Farm reduced their price using an automated CCC One function labeled ‘Average Private condition,’” the complaint reads.
Legal experts say if that’s proven true, the practice could constitute an unfair claims-settlement act under North Carolina law, exposing State Farm to treble damages under N.C. Gen. Stat. § 75-16.
Broader Trend: Similar Lawsuits in Other States
This isn’t the first time State Farm has faced accusations over its total loss valuation practices.
Similar class actions have been filed in Alaska, Illinois, Kentucky, Mississippi, Tennessee, and West Virginia, each arguing that the insurer’s automated pricing models produce artificially low payouts.
While courts in Kentucky and Mississippi dismissed comparable cases earlier this month, the Tennessee case — Clippinger v. State Farm, recently moved forward after the U.S. Sixth Circuit Court of Appeals upheld class certification on October 9, 2025.
That appellate ruling could influence Mr. Brewer’s case, signaling that judges are increasingly willing to let consumers challenge algorithm-based valuation tools in collective actions.
Automation on Trial: Can AI Be Held Liable?
The North Carolina lawsuit highlights one of the most rapidly evolving issues in modern insurance law: the legal accountability of automated decision-making systems.
As insurers increasingly adopt AI-driven valuation tools to speed up claims processing, a new question emerges can an insurer delegate judgment to software without compromising its legal duties to policyholders?
Legal experts generally agree that automation can be used, but it does not remove human accountability.
Insurers remain fully responsible for the outcomes of their algorithms, even when those systems are designed or maintained by third-party vendors.
Under bad-faith insurance and unfair trade practice statutes, companies must ensure that their technology complies with state law and produces accurate, unbiased results.
For a deeper look at emerging AI liability, see Who Is Liable for AI-Driven Accidents?.
If courts find that automated valuation platforms systematically undervalue claims, insurers could face heightened regulatory scrutiny, civil penalties, and potential class-wide damages.
The outcome may define how regulators, courts, and insurers balance technological efficiency with legal fairness in the era of algorithmic claims management.
What North Carolina Drivers Should Watch For
As of this week, State Farm has not yet filed a formal response in the North Carolina case.
If the court certifies the class, thousands of drivers who received CCC One-based valuations between 2020 and 2025 could qualify for compensation.
Attorneys advise policyholders to:
-
Request a copy of their CCC One Market Valuation Report.
-
Compare listed “comparable vehicles” with local retail listings.
-
Consult a consumer-protection attorney if the payout seems below fair market value.
These steps may help identify whether the insurer’s valuation practices fall within the scope of the class action.
The State Farm undervalued total loss class action sits at the intersection of automation, consumer law, and corporate accountability.
It raises fundamental questions about how far insurers can go in delegating key claim decisions to algorithmic tools and whether regulatory frameworks are keeping pace.
With more states seeing similar suits, the outcome of Craig Brewer’s case could redefine the boundaries of good faith and fair dealing in modern insurance claims and set a national precedent for AI transparency in the insurance industry.
People Also Ask
What is the State Farm total loss class action about?
The North Carolina class action claims that State Farm undervalued total loss car insurance payouts by using automated valuation software called CCC One.
According to the lawsuit, the program applied unlawful “condition adjustments” that reduced payout amounts by 4–9%, violating North Carolina’s Total Loss Regulation and Unfair Trade Practices Act.
What does “total loss” mean in car insurance?
A total loss happens when your car’s repair cost is higher than what the vehicle was worth before the accident.
In that case, the insurer must pay you the fair market value of the car — not what it would cost to repair it. Disputes often arise when insurers allegedly undervalue that fair market amount, as this lawsuit claims.
What is the CCC One Market Valuation Report?
CCC One is a software tool used by insurers to estimate a vehicle’s market value in total loss claims.
It compares similar vehicles on the market, adjusting for factors like make, model, mileage, and condition. The lawsuit argues that State Farm misused this software by applying a blanket downward adjustment not based on vehicle condition.
How does the North Carolina Unfair Trade Practices Act apply to this case?
The North Carolina Unfair and Deceptive Trade Practices Act (UDTPA) prohibits deceptive or unfair business conduct, including in insurance claims.
If the court finds that State Farm knowingly reduced vehicle values using illegal deductions, it could face treble damages — three times the amount of actual losses.
Can AI or automated tools be held responsible in insurance disputes?
While software itself can’t be sued, insurers remain legally accountable for how they use automation and AI in claim decisions.
Courts can rule that reliance on unfair or opaque algorithms violates bad-faith or unfair-claims laws, even if the insurer didn’t intend to mislead consumers.
What should North Carolina drivers do if they think their total loss claim was undervalued?
Policyholders should request a copy of their CCC One Market Valuation Report, review comparable vehicles, and speak with an insurance or consumer-protection lawyer.
If their payout seems artificially low, they may be eligible to join the class action or file an individual bad-faith claim.
