By LawInspectsSee, a lot of people when they hear the name of State Farm, they think of an insurance company that should come in and help out people when things or life go kinda sideways, right? Well, that is how it is supposed to work, but now, with this State Farm Lawsuit in place, everything is the opposite in actuality. How? Just to brief you a little bit here, with this overall AI trend that is going on these days, even State Farm decided to use this for claim handling, and that is where things went wrong, not for the company, but for the customers, and that is why this lawsuit is a thing right now.
Why Are People Suing State Farm?
You might not know this, but lawsuits against insurance companies aren’t new, whatsoever. They happen all the time, pretty much, and usually it has a lot to do with the claim handling process. But this one? Oh, well, the main issue this time revolves around technology, and to be more specific, how State Farm uses artificial intelligence (AI) to process claims, as per the details that are already out.
From the on-paper details, yes, the idea behind it sounds good, like how AI helps speed up things, somehow. You’d certainly agree to that, but the thing is, some customers say it’s not that fair. Fair in what sense, though? Well, they’re out there claiming that the system treats certain groups of people differently, which obviously raises some serious questions, and is kinda mind-blowing for an insurance company to be working like that.
Well, for that, there’s the second issue, and yes, this one has something to do with the undervalued car payments thingy. Some customers say that when their cars were totaled for the claim process, State Farm didn’t pay what their vehicles were actually worth. Nah! And that is where this second issue got mixed into this lawsuit.
The AI Discrimination Lawsuit (2025)
For now, it is the view of many people out there that at least these insurance companies should not be using AI in the claim process because it can very well be pretty discriminatory, and we can see that really well in this very State Farm Lawsuit.
To be more specific about the details here, for those who don’t know, this first lawsuit comes from Alabama. A couple named Gregory and Annette Kelly, both elderly and disabled, filed a case against State Farm, and as of now, that’s how it goes. Their allegations are simple; they say that their claim (worth something like $372,000) was delayed and mishandled, in actuality.
It is as per their allegation that State Farm’s AI tools flagged their claim for extra scrutiny, which very well led to slow approvals and unfair treatment, exactly. Was that the case, though? That is the very truth we’re trying to discuss in this lawsuit, and so far, State Farm is not holding up very well.
The Total Loss Payment Lawsuit (Also 2025)
It is as if this AI lawsuit wasn’t enough; there is a second lawsuit in place, too. And what is this one about? Well, as we hinted already, it has something to do with how this insurance company was handling car insurance. Brief? Oh, well, when your car is totaled, you expect your insurer to pay what it was worth before the accident, pretty sure. But some customers say that’s not happening with State Farm, right now, though.
And yes, it has somehow become an actual case against the company, though this one is not as big as the previous case, but it’ll certainly gain a lot of attention down the line. The main reason for that is that it can happen to everybody, like if the insurance company was liable for around $20,000 for the car insurance, so as per the claims and allegations of this lawsuit, they can miscalculate everything and only owe you just $15,000 or even less.
Though so far, this case has gone to two state courts, and they have dismissed it. But let’s see what happens next.