What happened: A New York appeals court revived an auto body shop's breach of contract claim against State Farm after the insurer failed to produce the rate survey behind a $6,500 repair underpayment
Who's involved: Prospect Auto Sales and Repairs (repair shop) and State Farm Mutual Automobile Insurance Company
What's at stake: $6,548.38 - the difference between $19,736.60 in repairs and $13,188.22 paid by State Farm
Where it stands: Summary judgment reversed; the case returns to trial court (slip opinion, subject to revision)
Why it matters: Insurers citing competitive-rate surveys to justify lower repair payments may need to actually produce them in court
State Farm relied on a competitive-rate survey to justify a $6,500 repair shortfall - then never produced it in court.
The Appellate Division, Second Department unanimously reversed summary judgment for State Farm Mutual Automobile Insurance Company on September 23, 2026, sending a collision repair underpayment dispute back to trial.
A 2018 Audi Q7 was damaged in a February 2023 accident. The policyholder filed a collision claim with State Farm, then took the vehicle to Prospect Auto Sales and Repairs for restoration. Before work began, she signed a repair authorization, a designated representative authorization, and an assignment of claim - giving the shop the right to negotiate costs with the insurer and pursue any underpayment.
Prospect repaired the vehicle for $19,736.60. State Farm paid $13,188.22.
The shop sued for breach of contract, arguing State Farm was obligated under the policy to cover reasonable and necessary repairs at the policyholder's chosen facility and had failed to negotiate in good faith over procedures, parts, and costs - in violation of Insurance Law section 2601 and 11 NYCRR 216.7.
State Farm asked the court to throw the case out, arguing there is no private right of action under those provisions. The trial court agreed and dismissed the complaint.
The appeals court disagreed on both counts.
Under a fair reading, the complaint was not asserting a standalone statutory claim. It was asserting breach of contract, with the statutory violations as supporting evidence. That distinction kept the claim alive.
State Farm had not earned dismissal on the merits either. The insurer argued it paid based on its own estimate at the "prevailing competitive rate," determined by a survey. The court called that argument "wholly conclusory and unsubstantiated" - because State Farm never produced the survey. An affidavit from a company representative fared no better, resting on hearsay within hearsay rather than personal knowledge.
The case returns to trial. The ruling does not decide whether State Farm underpaid - only that the shop's claim deserves its day in court.
For claims teams writing estimates against shop invoices, if a competitive-rate survey is the basis for paying less than what a shop bills, it needs to exist in the file - not just in the argument.
