In Oklahoma, we’ve been keeping a close eye on State Farm Fire and Casualty Company and its claims handling practices, as it appears something within State Farm has changed, making litigation against it more common. This graphic showing the trajectory of insurance-related lawsuits involving State Farm in federal courts across the country is telling:1
One case we have kept a particular eye on is Bates v. State Farm Fire and Casualty Company,2 pending in the Western District of Oklahoma. On November 7, 2022, after a five-day jury trial and nearly six hours of jury deliberation, the jury returned a verdict that State Farm breached the insurance contract and failed to act in good faith and to fairly settle its insured, Mr. Bates. Thus, the jury awarded $15,800.00 for breach of contract damages and $325,000.00 for State Farm’s bad faith conduct.3
During the trial, the jury heard evidence that a significant hailstorm struck the plaintiff’s rental property and damaged the plaintiff’s roof. State Farm investigated the reported damage by sending a then brand new adjuster to inspect the home. This adjuster had no real experience assessing or investigating hail damage, having only recently completed his initial training with State Farm, which was entirely virtual except for the few roofs she inspected with another adjuster. Of the roofs she had previously inspected with the other adjuster, none were found to have hail damage. Adjuster in Bates found covered hail damage on the soft metals of the home but not on the shingles. This decision prompted the plaintiff’s representative to request a new inspection by State Farm with an experienced adjuster. State Farm refused to grant the re-inspection. The jury further heard evidence of several mistakes made by the adjuster, including a miscalculation of the depreciation applied in State Farm’s estimate of damages and a failure by State Farm to pay for a mailbox and other soft metals that State Farm agreed were damaged by hail and covered. of the insurance.
Importantly, the jury also heard testimony from a former State Farm adjuster with more than 13 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.
The Bates The verdict came just a month and a half after another Oklahoma jury found that State Farm breached an insurance contract with its insureds and failed to treat its insureds in good faith. IN Rowan v. State Farm Fire and Casualty CompanyAn Oklahoma County jury awarded the plaintiffs $70,400.00 for State Farm’s breach of contract and $680,000.00 for State Farm’s bad faith conduct.4 IN Rowan, a storm tore the plaintiffs’ roof from their home and damaged the interior of the residence and the contents of the home. State Farm determined that the home suffered no structural damage; ignored plaintiffs’ repeated concerns regarding the home’s electrical wiring; conducted a results-oriented investigation of the Plaintiffs’ claims; and retained biased consultants to support State Farm’s position.
Of course, State Farm’s management conduct deserves due scrutiny. Like all insurance companies in Oklahoma, State Farm is prohibited from unreasonably and in bad faith withholding payment of a claim owed by the insured.5 If State Farm delays issuing payment to its insureds, it must have a reasonable basis for doing so, and it must also treat its insureds fairly and in good faith.6
1 Source: Lex Machina
2 Bates v. State Farm Fire & Cas. Co.No. 5:21-cv-00705 (WD Okla.).
3 Bates v. State Farm Fire & Cas. Co.No. 5:21-cv-00705 (WD Okla. Nov. 7, 2022).
4 Rowan v. State Farm Fire & Cas. Co.Oklahoma County Case No. CJ-2017-7301 (Okla. July 27, 2022).
5 Christian v. Am. Home Assurance Co.577 P.2d 899, 905 (Okla. 1977).
6 Ball v. Wilshire Ins. Co.221 P.3d 717, 724 (Okla. 2009).