Does State Farm Insurance Engage in Bad Faith Practices?

After being accused of engaging in bad faith practices, the largest property casualty insurer in the U.S., State Farm Insurance, has been ranked the third worst insurance company in America by the American Association for Justice (AAJ). Due to its denial of claims and delay of claim payments, State Farm, who refers to themselves as “good neighbors”, placed behind only Allstate, Unum and AIG.

According to the AAJ report, State Farm has been accused of mishandling Katrina claims, denying and delaying policyholder claims and acting recklessly.

After Hurricane Katrina wreaked havoc in 2005, State Farm routinely denied claims without basis. Private home inspectors later testified that State Farm instructed them to alter damage reports so the insurer could pay claims at a lower value or avoid paying claims altogether.

McKinsey and Associates, a New York consulting firm, was hired by Allstate and State Farm to recommend ways in which the insurers could better perform. Both insurers were instructed to deny claims, delay claim payments and contest lawsuits that should have been readily resolved.

State Farm insured homeowners in Oklahoma brought a class action lawsuit against the insurer after tornadoes caused $2 billion worth of damage there. A jury ruled that the company acted ‘recklessly’ and ‘with malice’ after it routinely under-valued the homeowners’ properties.

A customer satisfaction survey on FreeAdvice.com showed that the majority of State Farm customers were less than ‘extremely satisfied’ with their service. The breakdown of customer satisfaction among survey respondents looked like this:

Extremely Satisfied: 29%

Very Satisfied: 16%

Somewhat Satisfied: 9%

Unsatisfied: 12%

Very Unsatisfied: 34%

Some customers posted comments about State Farm on the survey administrator’s website. One comment expressed frustration over the insurer’s refusal to pay a small claim after 37 years of customer loyalty. Yet another expressed similar discontent after a homeowner’s single claim was filed and denied after 65 years of prompt and dilegent payment of premiums. In addition to having claims denied, customers have complained about being harassed and treated rudely by adjusters and an incompetent claims department. Many of the customers surveyed that, not only would they cancel their existing policies, they would also not recommend State Farm to anyone else.

Greg-GoldIf you are experiencing difficulty with your insurance company, you will need an experienced and compassionate Colorado insurance dispute attorney to handle your case. At the Gold Law Firm, we work hard to achieve the maximum compensation for all of our clients. Contact Gregory A. Gold of the Gold Law Firm today for a free consultation at (303) 694-4653.

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