For many, State Farm Insurance is no "good neighbor"
Posted: Wednesday, February 21st 2007
STATE FARM INSURANCE IS A DISTASTER TO THOSE WHO COUNTED ON AN INSURANCE COMPANY KEEPING ITS PROMISE
Once again I write briefly about a story where the actual facts are so bad that they just don’t need any embellishment. Eventually, hopefully, books will be written about the insurance fraud that occurred after Katrina. No, not the fraud you hear about the radio or see on the TV, but real fraud. The 6 and even 7 figures worth of fraud. The fraud that occurs when an insurance company accepts a premium and promises to pay when certain events occur and then later refuses to pay for any of a variety of excuses. We’re talking big dollars fraud. Most ordinary criminals can’t even dream this big.
Nevermind the intrinsic evil any human being must feel when victimizing the victims of a disaster the magnitude of Katrina.
An audio recording of a conversation between an insured and a State Farm adjuster demonstrates that State Farm had decided to deny her claim. Adjuster Alan Arad told Gail Farell and her family that State Farm had decided, just two weeks after Katrina struck, that State Farm would be sending a letter denying the claim because it had decided the loss was from flood and that wasn’t covered.
Adjuster Arad honestly stated that State Farm would send an engineer, later, to sort out the wind and flood damage. When asked how do you know the wind didn’t blow the house down, Adjuster Arad said, “This is the $64 question. Nobody knows.” That’s right. The adjuster admitted that no one could say if the damage was actually caused by a flood, but the company was going to deny the claim just the same.
State Farm adjuster Arad told the family the good news. They could take State Farm’s denial letter to FEMA to get some help. Yes, you heard that correctly. A company that wants to treat you “like a good neighbor” when it wants your premiums, must believe it’s downright neighborly to tell someone they won’t be helped and should seek government handouts. The recorded conversation is really an amazing read.
One couple took their “good neighbor” the insurance industry giant State Farm to trial to force the company to keep its promise. A jury listened to the evidence. State Farm got it’s day in court. The jury awarded damages to the couple and 2.5 million in punitive damages. Punitive damages are designed to set an example for others.
The award sent a message. The message was clear. If you are an insurance company and you promise to take care of people who pay you hard earned money you damned well better do it. If not, we’ll make an example out of you. In short, you aren’t going to profit by not keeping your promise. A federal judge, for reasons unknown, decided the award was too high and reduced it to 1 million. So State Farm quickly escaped 1.5 million of the damage award the community, through a jury, decided was appropriate. However, for State Farm that wasn’t enough. State Farm is still appealing.
State Farm denied 639 claims in Mississippi alone. It only used an engineer to investigate 2% of its claims.
On February 6, State Farm announced it would not renew coverage for 2,600 policyholders, mainly in Alabama’s beach resorts. This is reported here.
Nevermind the irony of an insurance company complaining that there are too many lawsuits while denying claims until the policy holder has no choice but to file a lawsuit.
Nevermind the intrinsic evil any human being must feel when victimizing the victims of a disaster the magnitude of Katrina.
Nevermind that most people only hear of an insurance company’s misdeeds when they occur on a level that reaches epidemic proportions.
State Farm is a continuing example of why there needs to be legislative reform allowing for oversight of insurance companies. It’s also an example of why judges should not be allowed to interfere with a jury’s verdict except in the most extreme circumstances. The jury listened to the evidence, deliberated and punished its “good neighbor” reasonably. Then State Farm succeeded in getting the verdict reduced. Lately State Farm agreed to settle over 600 claims for a compromise result, meaning less than it should have paid.
State Farm can deny claims. State Farm can force it’s insureds to file suit to make it keep its promises. State Farm can throw it’s money around to the various legislatures. But, and this is of major importance, it cannot require you to buy its insurance. Think about that. Then, read all you can about what happened during Katrina and State Farm’s actions. Then, listen to your heart, follow your conscious and vote with your premium dollar.
We can make a difference. Don’t believe me? Try it. Be a good neighbor for the Katrina victims of insurance fraud, they sure need one.