Allstate has settled a class action in Arizona over how it adjusted some homeowner and other structure damage claims. The lawsuit says the company wrongly withheld what it calls “nonmaterial depreciation,” essentially labor and similar costs, when it made its first payment on a claim. Claims in the settlement are due January 29, 2027.
The settlement is not final. A judge still has to approve it, and an earlier deadline to opt out or object falls on Monday, November 16, 2026. Allstate denies any wrongdoing, and the court has made no finding against it.
What Hernandez v. Allstate alleges about withheld depreciation
The case is Hernandez v. Allstate Vehicle and Property Insurance Company, No. CV-2026 00048, in Arizona Superior Court for Mohave County, according to the official settlement website. It asks whether Allstate properly deducted nonmaterial depreciation when adjusting certain Arizona property claims.
The court-approved notice defines the term as using the “depreciate removal,” “depreciate non-material” or “depreciate O&P” settings in Xactimate, or similar commercial estimating software. The notice says Allstate denies acting wrongfully or unlawfully, that no trial has occurred, and that the parties settled to avoid the cost of trial and appeals.
Unfinished job: The Hernandez notice stacks an opt-out date, an objection date, a December hearing and a January claim date, and a claim form that is pre-filled with an ID and PIN still has to be kept alongside the claim and policy numbers it lists. The four-date rule for reading a settlement notice in The Settlement & Refund Recovery System is built for sorting out exactly that kind of notice.
Who is in the Allstate class, and who is left out
The class covers policyholders under any Allstate property policy who made a structural loss claim for Arizona property. Three things must all be true: Allstate paid based on an Xactimate estimate, the claim produced an actual cash value payment, and nonmaterial depreciation was withheld from it. The initial payment must have been made between April 25, 2017, and October 1, 2026.
“Structural loss” means physical damage to a home, building, manufactured home, condo, rental dwelling or other Arizona structure. The notice lists nine insurers: Allstate Vehicle and Property, Allstate Insurance Company, Esurance Property and Casualty, Allstate Indemnity, Allstate Property and Casualty, Encompass Insurance Company of America, Encompass Property and Casualty, Encompass Indemnity and North Light Specialty Insurance Company.
Exclusions include claims under “labor permissive” policy forms that expressly allow depreciating labor, claims that exhausted the policy limits, and claims denied or abandoned without an actual cash value payment.
How the 50% plus 10% interest formula works
Two payment tracks appear in the notice. For most class members, the payment is 50% of the net estimated nonmaterial depreciation that was withheld and never later paid, plus simple interest of 10% a year from the date of the initial payment through the settlement’s Effective Date. The notice sets no minimum or maximum for that track.
Class members who already recovered all the outstanding depreciation through the claim process get a one-time payment of $10 to $360. The settlement agreement sets the scale: $10 where $1 to $2,500 was released, rising to $360 above $80,000.
As illustrative arithmetic only, $1,000 of withheld, never-repaid depreciation would produce $500 under the 50% rule before interest. The sources do not say what amount the interest is calculated on, so no total is given here. The Effective Date is the first date on which final judgment is entered and any appeals are over or the appeal period passes without one.
Mailed notices, the claim form and the January 29 filing
The agreement calls for the notice and a claim form to go by first-class mail to each potential class member Allstate identifies, followed by a postcard reminder at least 30 days before the claim date to those who have not filed or opted out. The notice says anyone who received it has been identified as likely a class member. The sample claim form is pre-filled with a name, address, unique ID, PIN, policy number, claim number and date of loss.
A claim form is required, and payment is not automatic. It must be postmarked or submitted online by midnight Mountain Standard Time on January 29, 2027. Anyone filing for a deceased or incapacitated policyholder must include proof of authority, and a claim assigned to a contractor needs a copy of the assignment. Eligibility is reviewed afterward, so receiving a form does not guarantee an amount.
Payments go out only after final approval, any appeals and claims processing. The agreement says checks void 120 days after issue, with unclaimed money handled under Allstate’s Arizona escheat procedures.
Opt-out, objection and the December 15 final approval hearing
Opt-out requests and written objections must both be postmarked by November 16, 2026. An opt-out is a signed letter with full name and address, mailed to Allstate Hernandez Depreciation Settlement, Attn: Exclusion Requests, P.O. Box 58220, Philadelphia, PA 19102. It cannot be made by phone, email or website. Opting out means no payment but keeps the right to sue Allstate individually. An objection is filed with the clerk in Kingman, with a copy mailed to the administrator, and the objector stays in the class.
Staying in the class, or filing a claim, releases Allstate from the claims the agreement defines. The court will hold the final approval hearing December 15, 2026, at 10:30 a.m. by Zoom, subject to change on the website. Class counsel will ask for up to $870,000 in fees and expenses and up to $7,500 for the plaintiff, paid separately by Allstate without reducing class payments. The court may award less.
Where to get help and the mistake that costs money
The administrator’s contact page lists 1-866-945-4242 and a Philadelphia mailing address. The notice says not to contact the court, Allstate or its lawyers about the settlement. Complaints about an insurer’s handling of a claim can go to the Consumer Services Division at the Arizona Department of Insurance and Financial Institutions, which lists (602) 364-2499 on its consumer help page.
The costliest mistake is letting the claim date pass because a mailed form looked like junk, or sending personal details to a look-alike site. Anyone unsure whether a property claim falls inside the class can check the official site rather than a third party.
Reading the Hernandez v. Allstate notice in order
The Allstate depreciation notice runs from an opt-out and objection date, through a final approval hearing, to a claim filing date and an eventual payment. A policyholder holding the mailed form would still need to sort which dates matter and log what was submitted.
The Settlement & Refund Recovery System includes the scam-proof rules, a step-by-step filing walkthrough and a claim log and payment tracker for keeping each filing step on record.
Open the step-by-step filing walkthrough in The Settlement & Refund Recovery System.
This article was created with AI assistance and reviewed for accuracy against the official settlement website, the court-approved notice, the settlement agreement and Arizona Department of Insurance and Financial Institutions materials.
Silas Redmond writes about the structure of modern banking, financial regulations, and the rules that govern money movement. His work examines how institutions, policies, and compliance frameworks affect individuals and businesses alike. At The Daily Overview, Silas aims to help readers better understand the systems operating behind everyday financial decisions. He also covers scams, fraud cases and the audits that expose them.
