American Family Insurance $3.83M Illinois Settlement

American Family Mutual Insurance Co. S.I.

American Family Mutual Insurance Co. S.I. customers in Illinois who had a structural property damage claim may be eligible to receive a cash payment from a class action settlement.

American Family Mutual Insurance Co. S.I. agreed to pay $3.83 million to settle a class action lawsuit alleging it improperly deducted nonmaterial depreciation, such as labor, overhead and profit, from certain Illinois property insurance claims.

Who is eligible to file a claim?

Claimants must meet all of the following criteria:

They held a property insurance policy American Family Mutual Insurance Co. S.I. issued in Illinois.
They made a structural loss claim under Coverage A or Coverage B of the policy.
American Family used an Xactimate estimate to determine their actual cash value payment.
American Family issued them an ACV payment but withheld nonmaterial depreciation or would have issued an ACV payment but withholding nonmaterial depreciation would have caused the loss to fall below the deductible.

The class periods are as follows:

For residential policyholders: Nov. 2, 2019, to Sept. 7, 2022
For commercial property policyholders: Nov. 2, 2018, to Sept. 7, 2022

The term “structural loss” refers to physical damage to a home, building, manufactured home, condo, rental dwelling or other structure covered by a qualifying American Family insurance policy in Illinois. “Nonmaterial depreciation” means the depreciation of labor costs, overhead, profit and other nonmaterial items (excluding sales tax) American Family calculated using Xactimate estimating software.

The settlement administrator used American Family's records to identify and notify possible class members.

Who is excluded from the class?

Policyholders whose claims arose under policy forms, endorsements or riders that expressly permit nonmaterial depreciation (specifically using the words “depreciation” and “labor”).
Policyholders with claims relating to roof damage under a residential American Family roof surface payment endorsement paid on a schedule (not by deducting depreciation).
Policyholders who received ACV payments that exhausted the applicable policy limits.
Policyholders whose claims American Family denied or abandoned without an ACV payment for any reason other than withholding of nonmaterial depreciation, causing the loss to fall below the deductible.
Policyholders for whom American Family did not generate an Xactimate estimate.

How much can class members receive?

If American Family withheld a class member's nonmaterial depreciation and did not subsequently it to them, they will receive 100% of the nonmaterial depreciation withheld from their ACV payment and not subsequently paid or what would have resulted in an ACV payment if the withholding of nonmaterial depreciation caused the loss to fall below the deductible. They will also receive simple interest of 5% per year calculated from Jan. 1 of the year they reported the loss through Jan. 1, 2025.
If American Family withheld a class member's nonmaterial depreciation and subsequently paid it to them, they will receive a fixed payment based on the amount of nonmaterial depreciation withheld and later paid. The payment schedule is as follows:

$1.00-5,000.99: $10
$5,001-$10,000.99: $20
$10,001-$20,000.99: $40
$20,001-$40,000.99: $80
$40,001-$60,000.99: $120
$60,001-$80,000.00: $160
Greater than $80,000.00: $200

How to claim a class action rebate

Class members can submit the online claim form or download, print, complete and mail the PDF claim form to the settlement administrator. The claim deadline is on Dec. 1, 2025

Settlement administrator's mailing address: Martin v. American Family Administrator, P.O. Box 2699, Portland, OR 97208-2699

Class members with multiple covered losses during the class period must submit a separate claim form for each loss.

What proof or documentation is necessary to submit a claim?

Claimants must provide:

Their American Family Policy number
Their American Family claim number
The insured premises' street address
The date of loss

Those filing as a legally authorized representative (for example, if the policyholder is deceased or incapacitated), must provide written proof of their authority to act on behalf of the policyholder.

Those who assigned their claim to another party, such as a contractor, must provide a copy of the assignment agreement.

Payout options

The settlement administrator will mail paper checks to the address provided on the claim form.

Settlement fund breakdown

The settlement fund covers:

Settlement administration costs: To be determined
Attorneys' fees and expenses: Up to $3,830,000
Service award to the representative plaintiff: Up to $7,500
Payments to eligible class members: Paid separately from the above costs

Important dates

Deadline for exclusion: Sept. 17, 2025
Final approval hearing: Oct. 20, 2025
Deadline to file a claim: Dec. 1, 2025

When is the Martin v. American Family Mutual Insurance Co. payout date?

The settlement administrator will mail payments to eligible class members 20 days after the court grants final approval of the settlement or 40 days after final claim payment determinations, whichever is later.

Why did this class action settlement happen?

The class action lawsuit alleged American Family Mutual Insurance Co. S.I. improperly deducted nonmaterial depreciation, such as labor, overhead and profit, from certain Illinois structural loss insurance claims.

The company denied any wrongdoing but agreed to settle to avoid the costs and risks of further litigation.