State Farm Ranked Fourth Worst Insurance Company in America

UPDATED: Jul 17, 2023Fact Checked

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Jeffrey Johnson

Insurance Lawyer

Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Mary Martin

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Mary Martin has been a legal writer and editor for over 20 years, responsible for ensuring that content is straightforward, correct, and helpful for the consumer. In addition, she worked on writing monthly newsletter columns for media, lawyers, and consumers. Ms. Martin also has experience with internal staff and HR operations. Mary was employed for almost 30 years by the nationwide legal publi...

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UPDATED: Jul 17, 2023

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UPDATED: Jul 17, 2023Fact Checked

State Farm Insurance, the largest property casualty insurer in the U.S., was ranked the third worst insurance company in America by the American Association for Justice (AAJ) for its denial and delay of claim payments. Only Allstate, Unum and AIG ranked worse than the insurer who refers to itself as a “good neighbor.” To learn more about the report which names the ten worst insurance companies in America, click here.

State Farm’s bad faith insurance practices

According to the AAJ report, State Farm has been accused of bad faith insurance practices, such as:

  • Handling Katrina claims. State Farm was notorious for its handling of homeowners’ claims related to the devastation left by Hurricane Katrina in 2005. Claims were routinely denied without basis and private home inspectors hired by the insurer have testified that State Farm told them to alter damage reports in order to avoid paying claims or pay less than the claims were worth.
  • Denying, delaying and defending. Like Allstate, State Farm also hired the New York consulting firm McKinsey and Associates to recommend ways in which the insurer could better perform. Again, like Allstate, State Farm was instructed to deny claims, delay claim payments and defend lawsuits that should have been resolved.
  • Acting recklessly. After tornadoes caused nearly $2 billion worth of damage in Oklahoma, State Farm insured homeowners brought a class action lawsuit against the insurer for routinely under valuating their properties. A jury ruled that the company acted “recklessly” and “with malice.”

FreeAdvice.com survey: 34% of State Farm customers very unsatisfied

According to customer satisfaction ratings on FreeAdvice.com, 34% of State Farm’s customers are not satisfied with the insurer. Here’s how survey respondents rated the insurer:

Extremely Satisfied: 29%
Very Satisfied: 16%
Somewhat Satisfied: 9%
Unsatisfied: 12%
Very Unsatisfied: 34%

Customers posted the following comments about State Farm on the website:

  • After 37 years of paying State Farm for homeowners insurance I filed a small claim ($6500) from a leaky pipe and they refused to pay anything. Why should I be loyal to them with that kind of service?
  • My mother has had State Farm Car and Home Insurance for 65 years. Her FIRST claim, happening in 2007, has been denied. Her garage ceiling fell after a storm with high winds and torrential rains. State farm has happily collected premiums for all these years, yet refused to pay one penny for clean-up, repairs, or replacement value of damaged property. We were treated very badly. I have never been treated [in a] more un-businesslike [way] in my life. No integrity was ever shown by State Farm. I would not send a DOG to State Farm! Beware!!!! State Farm IS NOT A GOOD NEIGHBOR!
  • In over 20 years with State Farm, we only had one claim. [They] would not settle [a] claim on a car accident. We were not cited for [the] accident, but [the] State Farm adjuster was rude, harassing and flat out refused to pay claim. [The adjuster] told us, “Don’t bother suing, because you won’t win.” We will definitely cancel our policies.
  • I have never seen such an incompetent department as the claims department [and am] very, very dissatisfied w/State Farm. First home claim and cannot believe how this is being handled.

If State Farm has denied your valid claim or rescinded your policy, it may have acted in bad faith. Contact an attorney whose practice focuses in this area of the law. Consultations are free, without obligation and strictly confidential.

Case Studies: Exploring Insurance Practices and Policyholder Experiences

Case Study 1: Delayed Claim Settlements

We examine the challenges faced by policyholders when insurance companies intentionally delay claim settlements. We explore the story of Mr. Anderson, whose property was severely damaged by a storm.

Despite providing all necessary documentation, his insurer, Insurance Company, repeatedly requested additional paperwork, causing significant delays in the claims process. We analyze the financial and emotional impact of such delays on policyholders and discuss potential legal remedies available to them.

Case Study 2: Denial of Coverage

This delves into the experiences of Ms. Johnson, who had a car accident and filed a claim with Insurance Company. However, her claim was unjustifiably denied, citing a minor discrepancy in the accident report. We explore the consequences of wrongful claim denials, the potential reasons behind insurance companies’ actions, and the recourse available to policyholders who believe their claims were unfairly rejected.

Case Study 3: Inadequate Settlement Offers

We highlight the story of Mr. Ramirez, who suffered a serious injury in a workplace accident. His insurance provider, Insurance Company, offered a settlement amount that fell far short of covering his medical expenses, lost wages, and long-term care needs.

We analyze the challenges faced by policyholders when dealing with inadequate settlement offers and provide guidance on negotiating for fair compensation. Additionally, we discuss the importance of seeking legal representation to ensure policyholders receive the appropriate financial support.

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Jeffrey Johnson

Insurance Lawyer

Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

Insurance Lawyer

Mary Martin

Published Legal Expert

Mary Martin has been a legal writer and editor for over 20 years, responsible for ensuring that content is straightforward, correct, and helpful for the consumer. In addition, she worked on writing monthly newsletter columns for media, lawyers, and consumers. Ms. Martin also has experience with internal staff and HR operations. Mary was employed for almost 30 years by the nationwide legal publi...

Published Legal Expert

Editorial Guidelines: We are a free online resource for anyone interested in learning more about legal topics and insurance. Our goal is to be an objective, third-party resource for everything legal and insurance related. We update our site regularly, and all content is reviewed by experts.

Get Legal Help Today

Find the right lawyer for your legal issue.

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