Ugly Lawsuits Against State Farm Insurance

State Farm Insurance may need to modify their slogan that says, “Like a good neighbor, State Farm is there.” According to government and media sources, the type and frequency of lawsuits against the insurance giant are showing a disturbing trend toward disreputable behavior. A few examples of such lawsuits follow below.

Ugly Lawsuits Against State Farm Insurance

Katrina Victims vs. State Farm Insurance

This lawsuit stems from the refusal of State Farm Insurance to pay the claim of families who lost their homes to Hurricane Katrina. State Farm stated that the policies only covered wind damage and did not cover water damage. They further stated that, since it was impossible to determine whether it was the hurricane’s wind or its water that demolished these homes, they must deny the claims.

In one case in particular, a judge and jury ruled differently. Upon hearing the case and deliberating its merits, the jury awarded one family punitive damages of $2.5 million, to which the judge awarded an additional $223,292, the amount of coverage on their home.

Class-Action Suit in Illinois Supreme Court Judicial Payments

In this matter, a group of attorneys filed a class-action suit against State Farm for its efforts to cover up its multi-million dollar support of Illinois Supreme Court Justice Lloyd Karmeier. The case alleged that Justice Karmeier subsequently ruled in favor of State Farm in lawsuits filed against the insurance giant.

The basis for the litigation was the efforts of State Farm to conceal its support of Justice Karmeier’s campaign rather than provide full disclosure as required by law.

Class-Action Suit for Denial of Claims of Tornado Victims

The tornado outbreak of 1999 that destroyed hundreds of homes in Oklahoma resulted in significant insurance claims and nearly as many problems filling them. According to the attorney who filed a class-action lawsuit on behalf of 70 families against State Farm, the insurance behemoth’s refusal to honor the claims of these families caused pain and suffering in addition to that which was brought by the twisters.

The court agreed with the attorney, awarding $13 million in damages to the plaintiffs. In addition to these awards, another 11,000 families who lost their homes and suffered denial of State Farm claims were also eligible for damages in addition to payment of their claims.

Texas Lawsuit Says State Farm Premiums Are Excessive

Most people agree that insurance premiums are higher than they wish to pay. However, the Texas Department of Insurance, a state agency, has filed a lawsuit against State Farm alleging that its premiums are unreasonably excessive.

The petition alleges that the insurance giant should be ordered to pay at least $310 million, but that the full amount owed is closer to $1 billion plus interest, to its policyholders. State Farm insists it owes nothing to policyholders.

In Summary

While many insurance companies have received negative publicity for reasons that may or may not have merit, the above cases, plus many others not covered here, portray a disturbing trend of unethical business practices on the part of State Farm Insurance. The trend has been continuing for more than 10 years. It may serve as a warning to those with insurance from State Farm or those considering purchasing insurance from State Farm.


Christian Hendrickson focuses on legal topics such as Identify Theft, Criminal Defense, Legal History, Financial Regulation, Personal Injury and others as well; to learn about identity theft protection visit ID theft.

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