State Farm to Pay $2M for Montana Claim Denials

An investigation found State Farm denied payments to auto accident victims under circumstances where compensation was warranted.

State-Farm-settlement-Montana-denied-claims
The settlement agreement follows a two-year investigation. Image via Shutterstock.

State Farm has agreed to pay a $2 million fine for engaging in unfair claim settlement practices, a move announced by Montana Securities and Insurance Commissioner Troy Downing, according to a report by the Longview News-Journal.

The settlement agreement follows a two-year investigation by Downing's office, which uncovered instances of underpayment to certain auto accident claimants between Nov. 1, 2018, and April 15, 2022.

The investigation found a pattern where State Farm denied payments to auto accident victims under circumstances where compensation was warranted. In response to these findings, besides the initial $2 million fine, State Farm faces the possibility of an additional $2 million penalty if the identified issues within the company are not adequately addressed.

As part of the settlement, State Farm is also mandated to re-assess all claims affected by these practices. To date, the insurance giant has compensated more than $1.1 million to its Montana customers.

Downing, while expressing concern over State Farm's previous actions, acknowledged the company's cooperation with his office throughout the investigation.

"Today we send a clear message that Montana will not tolerate unsupported fault being placed on victims of auto accidents," Downing said in a statement. He stressed the expectation for insurance companies to conduct thorough, fair and transparent examinations of the facts and law to ensure rightful payments are made as mandated by legislation.

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