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New lawsuits filed against State Farm alleging ‘bonuses’

Imagine you get in a car crash, and find out you don’t have the kind of insurance you need....
Imagine you get in a car crash, and find out you don’t have the kind of insurance you need. What’s more, the company claims you knew that all along.
Published: Mar. 5, 2019 at 10:52 PM EST
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The number of lawsuits recently filed against State Farm and a dozen agents has grown to more than 20.

LOUISVILLE, KY (WAVE) - The number of lawsuits recently filed against State Farm and a dozen agents has now grown to more than 20.

The claims include faked signatures on forms meant to protect people if hit by an uninsured driver.

WAVE 3 News first reported about the claims in some of the lawsuits in November in an exclusive Troubleshooter investigation. WAVE 3 News also played audio of a phone call that is now part of the suit, in which one agent admitted one of the signatures was faked.

Since then, it appears State Farm is trying to clean up the mess. But one attorney suing State Farm said the reason behind the alleged faked forms should have customers on alert.

One plaintiff, Chelsea Flynn, said she believes her father, Russell, never actually signed an uninsured motorist waiver form.

“They are doing people wrong and it needs to be fixed,” she told WAVE 3 News then, as one of the attorneys on the case shared an example of the signatures they allege were faked.

Flynn’s agent wasn’t the only one involved. The lawsuits name at least 12 agents across Jefferson and Bullitt counties.

One of the examples of claims in the lawsuits revolves around uninsured motorist coverage. Kentucky law requires auto insurance policies to include uninsured motorist coverage, unless the customer signs a form refusing it.

Dropping that coverage could save the customers a few dollars a month, but could also allow State Farm to avoid paying thousands of dollars following a wreck.

In November, WAVE 3 News reported that State Farm was investigating why some customers didn’t have the coverage even though they hadn’t signed the waiver to drop to it. Now, State Farm seems to be addressing the matter, contacting some Kentucky policy holders and asking them to sign them waiver.

“It’s a letter that is not telling the whole truth,” attorney Sam Aguiar said, adding that he believes the letters are glossing over the issues exposed in the lawsuit. Aguiar also said some policy holders have been missing the coverage all along, or that their signatures may have been faked.

“What they should be doing is saying, ‘Hey, we told you, you didn’t have this coverage since your policy began, and you never signed this form, but actually you were covered and if anything came up in that time, you should let us know because we want to do the right thing and take care of you,’” Aguiar said. “They are not doing (that).”

But why would agents representing one of the largest insurers in the state not offer the best coverage for their customers? According to the latest lawsuit filed, it comes down to one word -- bonuses. The suits claim the less the agents pay out in claims, the more money they can make. Those performing at the most profitable levels are rewarded by State Farm with lavish trips, and fancy titles like the “Millionaire Club” or “Life Traveler,” the lawsuit states.

“These agents have all these back door, you know, unethical incentive to make sure that these claims aren’t paid out,” Aguiar said.

State Farm responded to the allegation with the following statement:

“State Farm does not incentivize agents to reduce (uninsured motorist) coverage as alleged in the recently filed complaint. State Farm’s Sales Practices Philosophy is about placing customer needs first, operating fairly and doing the right thing. That is why State Farm continues to insure more cars and homes than any other insurer in the United States.”

Aguiar doesn’t agree.

“It’s disgusting; it’s abusive,” he said. “It’s happening so much more than I would have ever thought.”

In regard to the letters now being mailed to customers asking them to sign the uninsured motorist coverage waiver, State Farm said: “As part of our continuing investigation into UM/UIM claim handling, communications have been issued to some Kentucky policyholders. If customers have policy-related questions, we encourage them to contact their State Farm agent or a customer representative at 1(800)STATEFARM.”

There are no criminal charges filed against the company.

WAVE 3 News contacted the Kentucky Department of Insurance, and it would confirm if it is investigating. It did say it had received four other complaints against State Farm Auto in 2018, where were found to be justified.

Copyright 2019 WAVE 3 News. All rights reserved.