A number of attorneys, public adjusters and roofers have asked me questions about State Farm’s claims practices related to hail damage. Many insurance companies are unwilling to fully explain to their customers how they instruct adjusters to handle claims — unlike the federal government, which published a manual on national flood insurance adjusters and invites the public to its claims certification training. As a result, it is often difficult to find out what criteria an insurer uses to determine what is covered and what is owed. This is a problem with State Farm hail damage claims.
A blog posted by Micah Cartwright in our Oklahoma City office, Two Oklahoma juries find State Farm acted in bad faith, noted two State Farm hail damage cases, where State Farm was found guilty of improperly handling hail damage cases. Cartwright noted:
Importantly, the jury also heard testimony from a former State Farm adjuster with more than 1
3 years of experience adjusting property losses. She testified about an educational initiative called “Hail Focus.” According to this adjuster, when Hail Focus was initiated, her direct manager and team manager stripped her of her ability to approve payment for roof replacements without first obtaining approval from the team manager. This meant that she could not chalk areas of the roof that she felt were damaged by hail until she first spoke to the team manager; she could not authorize payment for an on-site roof replacement during an inspection without first obtaining approval from the Team Manager; and she could not tell property owners, contractors or public adjusters about her decision to pay for the roof until she first got approval from the team manager. At trial, the team leader, who is now a special section leader, denied knowledge of the Hail Focus initiative. The section chief provided similar trial testimony.
Digging a little deeper for questioners and readers of this blog, I found the policyholder’s response to State Farm’s motion for partial summary judgment1 worth studying and encouraging others to read it in its entirety. It read in part,
There is an alarming amount of evidence in this case and across an entire segment of State Farm’s claims department that saving money by turning a blind eye to its own training to recognize hail became a goal in itself. The truth revealed by an honest and thorough investigation would have dictated that the claimant’s claim should be paid. Clearly, however, State Farm was not interested in being a “good neighbor” to its insureds.
As shown above, State Farm engaged in bad faith claims handling by: (1) drastically reducing the amount of training provided to field adjusters and sending a field adjuster who had never experienced hail damage to perform an inspection for hail…(2) strip field adjusters of their ability to approve roof replacements due to hail damage because State Farm “paid for too many roof damages” …(3) instructed field adjusters not to use chalk to circle spots they thought might be hail damage..(4) requiring field adjusters to send photos of the roofs via text or email so Draper could decide whether or not to pay, a method that ignores State Farm’s training materials and expectations [sic] by Section Chief Sharon Arnold that identification of hail damage must include a tactile examination…(5) intentionally omit Draper’s consultation from the claim file…and (6) use the term “wear and tear” (which is not a covered cause of injury) to describe “old hail damage”…No one can honestly say that this is a reasonable way to conduct an investigation.
The brief notes that State Farm has training manuals, PowerPoints and videos that were included in the training. The problem was that this training would have proven a covered hail damage claim, and the new adjuster never went through the extensive training.
The partial deposition of the former State Farm adjuster is also worth studying.
The bottom line is that when dealing with State Farm in the field, one should politely try to determine the experience and training of the person handling the file. I would strongly suggest that that person’s authority to determine coverage and pay the claim be questioned. It is clear from the hail damage that State Farm gives little authority to the field claim adjusters. Then a desk management adjuster who never talks to the policyholder or goes to the scene of the claim makes the claims decisions.
Insurance companies have an obligation to service the product they sell when a claim is made. “Doing it right” can only be done by “doing it right.” My hope is that State Farm would take an honest look at what is going on in its claims business. Many customers trust it to “get it right”.
Today’s thought
A man must be big enough to admit his mistakes, smart enough to profit from them and strong enough to correct them.
—John C. Maxwell
1 Bates v. State Farm Fire & Cas. Co.No. 5:21-cv-00705 (WD Okla.).
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