Industry News

State Farm’s Claims Practices Under Fire — What It Means for Vehicle Owners

This article is commentary by the CCA team on recent industry reporting from Repairer Driven News.

A recent Fender Bender survey of 230 collision repair shops found that 57% reported State Farm reducing labor rates without explanation — with reductions of up to 20% in just eight months.

But reduced labor rates are only part of the picture.

According to industry leaders speaking at recent meetings, State Farm has implemented a centralized audit team based in Arizona that reviews and removes repair operations from estimates — without discussion, without explanation, and without accountability.

The result? Repair processes that used to take days now take 45 to 60 days of supplement cycles. Shops are caught between absorbing costs they shouldn’t have to or passing delays on to the vehicle owner.

Why This Matters to You

If you’re a vehicle owner with a State Farm claim — whether you’re their customer or the other driver is — these practices affect you directly:

Repair quality may be compromised

When an insurance company removes repair operations from an estimate, those operations don’t just disappear. They either get skipped — meaning your vehicle isn’t repaired correctly — or the shop absorbs the cost, which isn’t sustainable long-term.

As one industry leader put it: “We’re seeing a systematic approach to devalue the repair and to omit required operations and ultimately place that consumer in a car that is far less safe.”

Your claim takes longer

Extended supplement cycles mean your vehicle sits at the shop longer. That’s more days in a rental car. More days without your vehicle. More inconvenience — all because the insurance company’s internal process prioritizes cost reduction over resolution speed.

The appraisal clause is disappearing

Perhaps most concerning: State Farm has been removing the appraisal clause from policies in states where it’s not required by regulation. The appraisal clause is one of the most powerful tools policyholders have to dispute a claim valuation. Without it, your options for challenging a low offer become significantly more limited.

What You Can Do

• Read your policy — Check whether your policy still includes an appraisal clause. If it doesn’t, understand that your dispute options have changed.
• Choose your own shop — You have the right to have your vehicle repaired at the shop of your choice, not just the shops State Farm recommends through their Select Service program.
• Document everything — Keep records of every interaction, every delay, and every change to your repair estimate.
• Know your rights — If your total loss offer or diminished value claim is being lowballed, you have options — regardless of which carrier you’re dealing with.

The collision industry is watching these practices closely. Vehicle owners should be too.

Related Resources

• Your Right to Appraisal — How the appraisal clause works and why it matters.
• What to Do When Insurance Says No — The escalation process.
• The Truth About Collision Repairs — How insurers influence the repair process.