Author: Shelby Benavidez
Contributing Attorneys:
State Farm claims they’re “Like a Good Neighbor,” but their actions would beg to differ. For many policyholders, State Farm is there to protect their profits – not their people. When it comes time to file a claim, the company often delays, denies, or drags out the process, leaving customers frustrated and out of pocket.
In this article, we’ll look at what attorneys have observed, what courts have uncovered, and what real policyholders have experienced when dealing with this insurance giant.
How State Farm Delays Insurance Claims to Pay Less
Attorneys who regularly go up against State Farm say the company is notorious for finding reasons not to pay. Dana Nichols, an attorney who’s been with Daniel Stark since 2024, said, “They will drag a case on and on, coming up with countless excuses, just to prove that they have the money to waste. They would rather continue paying for litigation than paying out to injured claimants.”
Instead of focusing on the evidence of the accident or incident at hand, State Farm may try to reframe the case by looking backward, arguing that injuries or damages existed long before the event that triggered the claim. “They will dig up medical records from decades ago to try to argue that your injuries predated the wreck,” Nichols said. By doing so, they avoid immediate payouts and force policyholders into an exhausting fight.
Rather than negotiating fairly and promptly, State Farm may drag out the case by any means necessary. People dealing with mountains of medical bills or repair costs may feel pressured to settle for less just to get some form of financial relief, and, unfortunately, that’s what State Farm is banking on.
Court Cases Showing State Farm’s Bad Faith Insurance Tactics
The concerns voiced by attorneys have been confirmed in courtrooms across the country. One of the most famous examples is Campbell v. State Farm. In 1981, after a fatal car accident involving a State Farm policyholder, the company assured the driver that it would handle the matter. But when a jury awarded damages of $185,849, State Farm refused to pay or post a bond. The case spiraled into years of litigation, eventually leading to a $145 million punitive damages judgment against State Farm, later reduced by the U.S. Supreme Court. The verdict condemned the insurer for prioritizing profits over policyholders and showed how far it was willing to go to avoid paying legitimate claims.
California courts have also exposed State Farm’s practices. In the Gourley case, State Farm made what the court described as “grossly insufficient” offers. That led to nearly $1.5 million in punitive damages, illustrating how insufficient settlements and stonewalling are used as deliberate tactics.
Beyond auto accidents, State Farm’s questionable behavior has extended to disaster recovery. After Hurricane Katrina, whistleblowers known as the Rigsby sisters revealed that the insurer had systematically misclassified wind damage as flood damage. Why? Because flood losses were covered by the federal government’s program, not the insurer’s policies. A jury confirmed the fraudulent activity, and the case made national headlines.
Even state courts have weighed in on these practices. In Missouri, rulings established that “vexatious” denials, denials based on flimsy or unsupported suspicions, could qualify as bad faith. In South Carolina, courts noted that insurers who profit by holding onto claims money, while earning interest on the delayed payments, could face punitive damages if their behavior is found to be intentional. Taken together, these cases demonstrate a disturbing pattern: State Farm has repeatedly been willing to gamble against its own policyholders in order to protect its profits.
State Farm Insurance Investigations and Consumer Complaints
It isn’t just the courts calling State Farm out. Regulators have also stepped in to investigate the company’s practices.
In California, following devastating wildfires, the state’s insurance commissioner opened a formal investigation into State Farm’s handling of smoke and hazardous-material claims. Many homeowners reported being stonewalled by the company – claims were met with excessive documentation requests, inconsistent responses, and outright denials. The outcry was so strong that regulators formed a task force to determine whether State Farm was systematically denying valid claims.
Texas paints another troubling picture. In 2023, nearly 47 percent of homeowner insurance claims in the state were closed without payment. While this figure applies across the industry, State Farm is Texas’s largest property insurer, making it a major contributor to the problem. Policyholders reported high deductibles, reduced coverage, and denial of claims that should have been paid. Many Texans said they chose not to fight because the process of appealing was overwhelming and, in many cases, stacked against them.
Even on the national stage, testimony has supported what attorneys like Nichols describe. During a U.S. Senate hearing, insurance adjusters revealed that they were pressured to reduce payouts after hurricanes. Although the hearing addressed multiple carriers, critics pointed out that State Farm has long relied on the same tactics of delay, deny, and minimize.
Attorney and Policyholder Stories of State Farm Claim Denials
For many people, stories of State Farm’s tactics are not surprising because they’ve lived through them. Both attorneys and policyholders share similar experiences in how frustrating and difficult it can be to deal with State Farm. Ashley Carpenter, another attorney with Daniel Stark, shared several examples from her experience:
“One time, the week before pretrial, State Farm reduced our response deadline to their counteroffer from the next day to 5 PM the same day… at 2 PM,” Carpenter recalls.
In another case, she explains, “State Farm showed up to mediation on a blown stowers case with an out-of-state adjuster who had never reviewed the file before. To date, they still haven’t hired any experts to dispute any of our bills or causation.”
Carpenter also shared a moment that illustrates the company’s approach to negotiations: “I called State Farm to speak directly to the adjuster because the attorney they hired was impossible to negotiate with. They were so lovely and polite to me – until they realized I was the Plaintiff’s lawyer and not the lawyer they hired.”
Everyday policyholders face similar obstacles when trying to get their legitimate claims paid. One policyholder dealing with water damage in a rental property provided photographs and clear evidence that mold was not the cause. Yet State Farm sided only with its adjuster’s report and denied the claim, disregarding all contradictory proof. Another Texas homeowner said their water damage claim was denied after the insurer argued that “corroded” pipes were to blame, despite inspection reports showing otherwise.
In auto claims, similar stories appear again and again. One driver provided police body-cam footage and vehicle damage as proof of fault, but State Farm denied the claim three separate times.
These real-world accounts prove how State Farm fights claims. They drag out the process, deny evidence, and lean on technicalities to force policyholders to either give up or settle for far less than they deserve.
How to Fight State Farm Insurance Claim Denials
So, what can you do if State Farm – or any insurer – denies your claim? First, document everything. Keep records of all communications, photographs of damages, medical records, and anything else that supports your claim. Second, consider consulting an attorney. The insurance company’s own research shows that clients with an attorney secure 3.5 times more than those who fight it alone. Finally, if you believe your insurer is acting in bad faith, file a complaint with your state’s insurance commissioner. Regulators rely on these reports to investigate patterns of abuse.
If you’re insured by State Farm, you might get screwed when the time comes to file a claim. The company’s carefully cultivated image as a friendly, reliable neighbor often vanishes when money is on the line. As Dana Nichols put it, State Farm would rather dig through decades-old medical records or spend thousands on litigation than simply pay injured people what they are owed. From major court rulings to small consumer disputes, the story repeats itself: delay, deny, and minimize. Don’t let yourself become another victim of these tactics. Know your rights and be prepared to fight back.
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