State Farm has agreed to pay $1.35 million to Kentucky after failing to disclose underinsured and uninsured motorist coverage to some auto insurance claimants.
The Kentucky Attorney General's Office investigated State Farm after receiving complaints that agents were not properly informing customers about their full coverage options. The investigation found that State Farm employees were "inadvertently failing to identify and disclose UM and/or UIM coverage available under a State Farm automobile policy" on some occasions.
As a result of the settlement, State Farm has agreed to:
- Require internal policy and procedure compliance against signing selection/rejection forms without permission.
- Continue training its claims personnel on the importance of complying with the revised claim procedures.
- Train claims personnel on the importance of using the updated search tool to confirm that all available coverages are reasonably identified and disclosed.
- "Use its best efforts" to file a proposed multi-car policy form with the Kentucky DOI in 2025.
The AG's Office says the settlement is not an admission of liability or wrongdoing on State Farm's part.
In addition to the settlement, State Farm has also made changes to its Offer and Acceptance (O&A) agreement:
- Auto glass shops are now barred from subletting services, such as camera recalibrations, to third-party firms.
- Auto glass shops must confirm that the vehicle on dispatch matches the one having the work done.
- Auto glass shops must agree to fulfill requests for its moulding invoices when asked.
- Prior authorization is required for calibration when not completed by the auto glass shop itself.
- Auto glass shops must notify State Farm of billing discrepancies first before agreeing to arbitration.
These changes are likely an effort by State Farm to avoid litigation similar to what's ongoing between GEICO and Glassco Auto Glass in Florida.
In that case, Glassco filed suit against GEICO over alleged "deeply discounted" payments the carrier made based on the "prevailing competitive price" in the National Auto Glass Specifications (NAGS) for auto glass repair. Glassco argued that nearly all of the 1,773 claims it filed with GEICO between 2016 and 2019 were underpaid. The plaintiffs sought to collect the difference between its invoiced charges and what GEICO paid, which Glassco found to be $700,000.
GEICO then countersued Glassco in federal court for more than $700,000 paid on claims from 2016 forward, alleging Glassco isn't entitled to payment because it violated Florida's Repair Act. GEICO appealed the district court's ruling in favor of Glassco to the 11th Circuit.
The 11th Circuit judges considered the case and determined the Supreme Court needed to weigh in. The judges sent two questions to Florida's Supreme Court:
- Does Fla. Stat. 559.921(1) grant an insurance company a cause of action when a repair shop does not provide any written repair estimate?
- Do the violations here under the Repair Act void a repair invoice for completed windshield repairs and preclude a repair shop from being paid any of its invoiced amounts by an insurance company?
Fla. Stat. 559.921(1) is a trade, commerce, investments, and solicitations regulation that allows customers to sue for damages and injunctive relief.
Photo Credit: kentucky-state-fair
Categories: Kentucky, Business