A major development has surfaced in the State Farm property insurance lawsuit, one that could affect nearly 200,000 California homeowners. On July 15, 2025, U.S. District Judge William H. Orrick certified a class action against State Farm General Insurance Company, allowing policyholders across the state to move forward collectively.
At the center of this case is a dispute over how the insurer calculates “actual cash value” (ACV) when paying claims.
The lawsuit alleges that State Farm improperly reduced insurance benefits by depreciating sales tax. Plaintiffs argue that this method results in widespread State Farm sales tax underpayment, which leaves homeowners with less money than they are owed under their policies.
Background of the Case
The class action was originally filed in March 2023 by homeowners Melissa Pitkin and Dan Grout. As reported by the USA Herald, the couple lost their home in Healdsburg, California, in the 2020 Walbridge Fire and filed a claim under their State Farm property insurance policy. Their policy allegedly covered both the structure and personal property, with a personal property limit of more than $500,000.
After submitting their claim, plaintiffs say State Farm issued partial payments in late 2022 and early 2023. According to court filings, those payments were reduced because State Farm depreciated sales tax when calculating ACV for lost personal items.
Pitkin and Grout claim this practice violates the California Insurance Code, which restricts insurers from deducting anything beyond physical depreciation when determining ACV.
Class Certification
Judge Orrick’s order formally certified a class defined as all individuals who, between March 1, 2019, and present, held a State Farm property insurance policy in California, suffered a covered loss, and received ACV benefits reduced due to sales tax depreciation.
Court filings estimate this group includes roughly 191,362 homeowners.
The certified claims include breach of contract, breach of the implied covenant of good faith and fair dealing, declaratory relief, and violations of California’s Unfair Competition Law. The ruling represents a significant advancement in the State Farm California class action, allowing homeowners to collectively challenge what they describe as systemic underpayment practices.
State Farm’s Position
State Farm does not dispute that it applies sales tax depreciation as part of its ACV calculation. Under its approach, the company says it first determines the replacement cost of an item, including sales tax where applicable. It then subtracts depreciation to arrive at ACV—the formula at the heart of the lawsuit.
However, the insurer argues that ACV claims vary case by case, depending on property details and policy limits. For that reason, the company asserts the case should not be treated as a class action.
State Farm has consistently rejected allegations of an underpaid claims lawsuit, maintaining that its approach complies with state law.
Judge’s Reasoning
In certifying the class, Judge Orrick found that a central legal question predominates over individual differences: whether depreciating sales tax in ACV calculations is lawful under California law. He pointed to California Insurance Code Section 2051(b), which limits deductions in ACV calculations to “physical depreciation” only.
The judge referenced his own 2017 ruling in a similar case, where he had also sided with plaintiffs challenging insurer practices. Although another California judge, William Highberger, previously ruled in favor of State Farm in state court, Orrick maintained his interpretation. “I made a call on this… I’m sticking with mine,” he stated during proceedings.
This interpretation likely gives momentum to plaintiffs’ claims that State Farm sales tax underpayment is not merely a dispute over numbers but potentially a systemic issue affecting thousands of homeowners.
Case Timeline
The State Farm California class action has already seen several key milestones:
- March 1, 2023: Lawsuit filed by plaintiffs Pitkin and Grout.
- July 15, 2025: Judge Orrick certified the class of nearly 200,000 California policyholders.
- August 28–29, 2025: The court approved adjustments to the pretrial schedule at State Farm’s request.
- March 11, 2026: Deadline for dispositive motions.
- May 4, 2026: Pretrial conference scheduled.
- June 1, 2026: Jury trial set in San Francisco before Judge Orrick.
This schedule means the case will likely remain active for several more years before resolution, with the trial date more than six months away as of writing. In the meantime, both sides are expected to continue filing motions and presenting expert analyses on the legality of the State Farm ACV depreciation.
Who Qualifies for the Lawsuit?
Homeowners who believe they are part of the certified class should review the eligibility criteria.
According to Judge Orrick’s order, the class includes:
- California residents insured with State Farm between March 1, 2019, and the present
- Those who held a State Farm property insurance policy and filed a covered property loss claim
- Individuals who received actual cash value (ACV) benefits reduced by sales tax depreciation
- Policyholders who were paid less than the full policy limits
The certification is automatic, meaning policyholders do not need to apply to join.
If plaintiffs succeed, members of the class could see financial relief. Possible results include compensation, policy changes, and potential influence on similar lawsuits nationwide, particularly involving other State Farm underpaid claims lawsuits.
How to File or Monitor a Claim
Currently, no settlement website or claim submission process has been established. For now, eligible policyholders should follow official court filings and legal notices about the State Farm California class action, check their eligibility, prepare documentation, and watch for further announcements.
What This Case Means for California Homeowners
The State Farm property insurance lawsuit represents more than a technical dispute over insurance math. It highlights the potential tension between policyholders seeking full recovery and insurers defending their claim-handling practices. With a trial set for June 2026, the outcome could reshape how claims are calculated across California and potentially influence cases nationwide.
For homeowners, the certified State Farm California class action can offer a pathway to seek redress for alleged State Farm sales tax underpayment.
If you were insured under a State Farm property policy in California since March 2019 and believe your claim was reduced due to the State Farm ACV depreciation, you could be eligible to participate in this lawsuit.
Frequently Asked Questions (FAQ)
It challenges State Farm’s practice of depreciating sales tax when calculating actual cash value (ACV) payouts, which plaintiffs argue violates the California insurance code.
California homeowners insured by State Farm between March 1, 2019, and the present who had claims reduced due to sales tax depreciation and were paid less than their policy limits are qualified.
ACV depreciation is State Farm’s method of including sales tax in the replacement cost of items and then subtracting depreciation. Plaintiffs say this process results in lower payouts.
You do not need to opt in. If you meet the criteria, you are automatically part of the State Farm homeowners class action in 2025. Claim instructions will follow if there is a settlement or court-approved distribution process.
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