State Farm has reviewed 18,000 claims and paid out an additional $5.2 million to Montanans following action by the state’s Commissioner of Securities and Insurance (CSI) earlier this year for unfair claims settlement practices.

CSI Troy Downing’s office conducted a two-year examination of State Farm’s claim handling practices and found the company had underpaid several third-party automobile claims for which it was fined $2 million. In February, State Farm agreed to make several corrective actions as outlined in the consent agreement and final order from CSI.

Before referring the matter to the examiners, CSI said it had “received numerous complaints from consumers about the company [State Farm] applying comparative negligence against them in situations where consumers believed they were not at fault.”

State Farm faces an additional $2 million fine if corrective actions aren’t satisfactorily made, according to CSI.

CSI will conduct a follow-up exam on or around February 2025, according to the consent agreement.

“To determine if there were improper settlement practices, the reviewers conducted an analysis of the company’s claim files to see if the evidence in the file supported the application of comparative negligence and to see if loss of use was paid appropriately for all days where it was owed,” a CSI spokesperson told Repairer Driven News.

Referring to the exam report, they noted it was discovered that a common error made by State Farm was to apply a comparative negligence percentage before a reasonable investigation was completed such as missing key information like police reports, recorded statements by the parties, and photographs of the vehicles and/or scene.

“As an example, initially, State Farm may have considered the third party as 25% at fault,” the spokesperson said. “Yet, after our review, we found no evidence in the file to support the 25% at fault,” the CSI spokesperson said. “In this case, State Farm would be required to pay the additional 25% to the third-party claimant.

“State Farm has worked diligently to review claims as required by the February 2024 consent agreement; they have either met or are currently on pace to meet the requirements outlined in the consent agreement.”

In a press release, Downing added, “We applaud State Farm for diligently reviewing the claims and working with our agency to make good on the February 2024 consent agreement. We will continue to work together to ensure the money is rightfully being returned to Montana consumers.

“I am proud of the work of our agency, which continues to hold companies accountable on behalf of Montana consumers.”

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