Most people give their money to insurance companies they trust. You believe that, should you need to file a claim, your interests will be protected. Unfortunately, that was not the case for many home owners who put their trust in State Farm. Following Hurricane Katrina in 2005, home owners found themselves wishing they had trusted another provider.
Like many insurance providers, State Farm’s home insurance policy covers wind damage but does not offer protection from water damage. Most companies offer a separate “flood” rider. Whether or not you purchase it is up to you. Sadly, for many home owners who survived the hurricane, their homes were washed away. Bare slabs left very little evidence of what really happened to their homes.
Because there was little evidence to disprove them, inspectors representing State Farm declared homes to be damaged by flood waters and not wind. This allowed the company to declare claims invalid. Few people took State Farm to court, but some have, resulting in the company being found guilty of fraud.
In one example, dating to 2013, the company attributed damage to the McIntosh family’s home to water. The damage was actually caused by wind. Cori and Kerry Rigsby, sisters, were key witnesses to the prosecution, testifying to witnessing State Farm representatives pressure engineers to report that damage to the home was caused by water instead of wind.
State Farm appealed the decision and lost. The insurance company was forced to pay $750,000 in damages. The lawyers in the case have appealed as well. They claim that the verdict itself leads to a “high probability that State Farm submitted more than one false claim.”
Following the case, the state of Mississippi itself hired the same lawyers and sued State Farm. The state is alleging that the company denied claims filed by homeowners, allowing a federally-funded program to give money to homeowners instead. It is anticipated that the insurance giant will face the same verdict in the larger case as it did in the McIntosh case.