State Farm is being sued – AGAIN. This time, again, according to the Washington Post, whose coverage of this has been excellent, it is related to Hurricane Katrina losses. In this case, there is an interesting twist. The couple who is suing has two reports from the engineering firm that State Farm hired. The first report says the damage was wind related, a covered cause of loss, and the second one says the damage was flood related, which is not covered. State Farm, using the second report, denied the claim. State Farm says it only received one report and that they never asked the engineer to change the report, but their spokesman said “State Farm contacted Forensic once it was determined this claim could more accurately be evaluated if we included an engineering review with our own claims analysis.”
Apparently State Farm has a few issues here. Their insureds, the people suing, received the first report from their agent. So, someone at State Farm received that first report. Second, State Farm may not have said “Go change your report,” but when you ask the engineer to re-evaluate the loss, you are asking for a change in the report. State Farm should at least admit that.
And third, and most importantly, when I was an adjuster there was a simple rule: if there is any doubt in coverage, you give the benefit to the insured. Here, there is clearly a doubt. State Farm’s own expert says coverage and then no coverage. That seems like doubt. As in baseball when the tie goes to the runner, in insurance, the tie goes to the insured. State Farm needs to step up, pay the claim, and admit a mistake. That is the right thing to do.
We will now see if you really are in good hands.