Oklahoma couple says State Farm offered to cover a fraction of their $22K roof repair. Now, the state AG is intervening after hundreds of complaints

Those words were prophetic: an adjustor declared the roof to be in fair condition and the insurance giant offered the couple about $1,400.

Another hail storm the next year was enough for State Farm to admit there was damage, but the company’s calculations of damage was so low it didn’t even rise above the Hursh’s deductible. Ultimately the couple had to take out a loan to cover the $22,000 cost of a new roof.

“I’m trying to do the right thing,” Billy Hursh told local news outlet Oklahoma Watch, "I'm trying to take care of my home, and this is why I had homeowners insurance.”

It turns out the Hurshes were not alone: when they took action against State Farm earlier this year, they became one of more than 200 such cases waging lengthy battles against the insurance giant.

Now these everyday people have an ally in their fight, and that ally is the state’s Attorney General.

Charged more but covered less

On Dec. 4, Oklahoma’s Attorney General, Gentner Drummond, filed a motion to intervene in the Hursh’s case against State Farm, “alleging that the company operated a coordinated program to limit roof-related insurance payouts by denying or reducing valid hail and wind claims,” according to a news release from the AG’s office.

According to Drummond, while State Farm markets its policies as providing full replacement-cost coverage, and charges for them accordingly, the customer ends up getting much less than they should, as claim outcomes aren’t determined by what the policy promised, but rather by the need to meet corporate savings targets, resulting in a persistent campaign of claims denial.

“Oklahomans can weather inflation and Oklahoma storms, but they cannot withstand a system in which they are charged more while effectively insured less,” says Drummond, who announced his run for governor earlier this year. “Inflation and weather do not explain, let alone justify, the widening gap between what Oklahomans pay and what they receive.”

The supporting petition filed with the motion called out insurance giant’s alleged plan to cut down on payouts by name: State Farm “implemented an internal program, commonly referred to as the ‘Hail Focus Initiative’ to drastically reduce aggregate roof indemnity payments in Oklahoma … State Farm secretly substituted restrictive, extra-contractual standards and used those hidden standards to deny or minimize payment of legitimate covered losses” (3).

Drummond said he sees the “enterprise-wide scheme” as qualifying as racketeering under Oklahoma law, which would be a civil matter in this case.

The petition alleges that the harm to numerous Oklahoma policyholders is proof of the “pattern of racketeering activity” required by the Oklahoma Racketeer-Influence and Corrupt Organization Act. The petition also accuses State Farm of violating the Oklahoma Consumer Protection Act and the Oklahoma Deceptive Trade Practices Act, as well as civil conspiracy and unjust enrichment.

Drummond has said that if evidence indicates violations of criminal law, he would not hesitate to pursue criminal charges (2).

Highest premiums in the country

The intervention is the latest in a series of events signaling escalating frustration with the state’s largest property insurer.

Oklahoma City law firm Whitten Burrage, which has taken on over a hundred cases similar to the Hurshes’ in the last few years, fought to compel State Farm, the nation’s largest property insurer, to produce documents that would confirm the existence of the alleged plan.

Reggie Whitten, speaking in open court in November, put it plainly: “You got a scheme when you are going to reduce the claim before it even happens, and make billions” (1).

It took a year, but the firm’s fight to appoint a special discovery master resulted in Whitten Burrage being granted greater access to company records. It was after this that State Farm began to settle cases against the firm one by one.

December’s intervention is not the first time Drummond has broached the issue: In a letter to the state’s Insurance Department Commissioner Glen Mulready, Drummond said that “Oklahomans are currently paying, on average, the highest homeowner’s insurance premiums in the country” (5).