State farm national offer and acceptance agreement

State Farm has reached a $1.35 million settlement with Kentucky Attorney General Daniel Cameron over its agents’ failure to disclose information to some auto insurance claimants about possible additional underinsured and/or uninsured motorist coverage.

“This settlement with State Farm provides us confidence in State Farm in its role as an important insurer in the Commonwealth,” Cameron said in a written statement. “I’m grateful to State Farm for working with us to come to a fair resolution and for taking concrete steps to ensure something like this does not happen again.”

The $1.35 million will be paid to the state of Kentucky in a lump sum payment as reimbursement for the costs of the AG Office’s investigation.

Cameron issued a civil investigative demand on Feb. 11, 2019, and modified it on Oct. 11, 2019, to address:

    1. Whether State Farm had failed to identify and disclose uninsured motorist (UM) and/or underinsured motorist (UIM) coverages available under State Farm automobile insurance policies to affected claimants and insureds who were entitled to said coverage; and
    2. Whether State Farm agents or agent team members were signing UM selection/rejection forms without the policyholder’s authorization or consent.

    Through its “good faith efforts” to respond to Cameron’s inquiries before his investigative demand, State Farm learned in 2018 that, on some occasions, its claims personnel were “inadvertently failing to identify and disclose UM and/or UIM coverage available under a State Farm automobile policy,” the Nov. 29 settlement agreement states.

    The coverage could have possibly provided more coverage to a collision claimant if they qualified as an insured under an additional household policy as a named insured, named insured’s spouse, or resident relative. It would have only applied to vehicles involved in a collision and listed on the claim.

    “State Farm voluntarily initiated a review of claims made by Kentucky claimants and made supplemental payments in situations where claimants qualified as an insured under the additional household policy and had damages that warranted payments above the initial UM or UIM limits payment,” the settlement agreement states. “Upon receipt of the Civil Investigative Demand, State Farm expanded the timeframe of the claims to be reviewed by an additional one year.”

    Twice in 2019, State Farm provided its claims personnel with specific and detailed steps to find and disclose UM and UIM coverages. In 2020, personnel were provided with a search tool to find potential additional policies, the agreement states.

    A civil Circuit Court lawsuit was filed by a policyholder in May 2019, which was later made a class action suit and moved to federal court. A settlement was reached that paid those who were found to have had UM and/or UIM coverage at the date of loss and didn’t know they could use it.

    The unauthorized signature allegations were found to be true, at least in one instance, and each active policyholder with UM coverage was given coverage equal to their liability limits until the next renewal date at no charge, according to the settlement document.

    As a result of the discovery, one employee was fired, and another retired.

    The Kentucky Department of Insurance also investigated whether State Farm agents were signing UM selection/rejection forms without policyholder authorization and closed its investigation without any findings.

    Under the terms of the settlement agreement, State Farm agreed to: