Farmers Insurance Liable For $80M for Underpaying Oklahomans Over 13 Year Period

Farmers Insurance Group was found liable for $80 million to Oklahoma homeowners for underpaying insurance claims from 1994 to 2007. The lawsuit, which alleged breach of contract and bad faith, ended up costing Farmers a whole lot more than it would have paid in the form of punitive damages and litigation costs.

Underpaying claims for 13 years

Homeowner insurance giant Farmers Insurance Company, a subsidiary of Zurich Financial Services in Switzerland, was accused of underpaying homeowners’ claims to approximately 76,000 Oklahomans over a 13 year period. The Mid-westerners had enough and sued the insurer for breach of contract and bad faith insurance practices. According to news reports, while the average cost of underpayment per household was approximately $575, an Oklahoma jury awarded the plaintiffs a great deal more.

The award consisted of $50 million for breach of contract, $50 million for engaging in bad faith insurance practices and another $30 million for punitive damages. However, some of the damages were duplicated, so the $130 million award was reduced to $80 million. Homeowners are expected to receive 15% interest on the actual damages and attorneys’ fees. The insurer says that it plans to appeal the verdict.

David vs. Goliath

Can the average homeownerreally fight back when a global insurance company doesnt’ honor their valid claim? Absolutely. Here are some tips on how David can beat Goliath:

• Keep records – of every conversation and correspondence sent and received.
• Don’t be afraid to speak with a supervisor if your claim representative isn’t helpful.
• Stay on top of your claim by being persistent with your claim representative.
• Contact your state’s Insurance Commissioner if you can’t get satisfaction. To find yours, go to: https://www.naic.org/state_web_map.htm.
• Seek the advice of an attorney. As this case shows, others like you may be in a similar situation and an experienced attorney whose practice focuses in this area of the law will be able to determine which courses of action would provide the best remedy for you.

If your insurance company has denied your valid claim, contact an experienced bad faith insurance attorney to discuss your situation with. Consultations are free, without obligation and are strictly confidential. In addition, most lawyers work on a contingency fee basis in this area of the law – meaning that you don’t pay anything unless they recover for you.

Farmers Insurance Liable for $80M: Case Studies on Insurance Misconduct

Case Study 1: Liability Insurance for Farmers Insurance

Farmers Insurance Group, a leading insurer, faced a significant lawsuit for underpaying homeowners’ insurance claims in Oklahoma over a 13-year period. The case highlights the importance of liability insurance for insurance companies themselves. In this instance, if Farmers Insurance had obtained comprehensive liability insurance coverage, it could have mitigated the financial impact of the lawsuit.

Liability insurance would have provided financial protection for legal expenses, punitive damages, and potential litigation costs, safeguarding the company’s assets and reputation.

Case Study 2: Professional Liability Insurance for Claims Adjusters

Claims adjusters play a crucial role in the insurance industry, determining the appropriate compensation for policyholders’ claims. In the case of Farmers Insurance, the allegations of underpaying claims may have involved the actions of claims adjusters. By having professional liability insurance coverage specifically designed for claims adjusters, Farmers Insurance could have protected its employees from personal liability and legal consequences.

Professional liability insurance would have provided coverage for claims arising from errors, omissions, or negligence in the adjustment process, reducing the financial risks associated with individual claims adjusters’ actions.

Case Study 3: Errors and Omissions Insurance for Insurance Companies

In the case of Farmers Insurance, the lawsuit alleged bad faith insurance practices, indicating potential errors or omissions in the company’s claims handling and policy administration. By having errors and omissions insurance, also known as professional indemnity insurance, Farmers Insurance could have obtained coverage for claims arising from mistakes or negligence in its operations.

This insurance would have provided financial protection against legal actions related to the alleged underpayment of claims, ensuring that the company had the necessary resources to defend itself and potentially settle claims without significant financial strain.