Class Action Lawsuit Alleges State Farm Forged Documents, Concealed Available Insurance Coverage

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State Farm Mutual Automobile Insurance Company is on the receiving end of a proposed class action wherein a consumer claims the insurer has engaged in a fraudulent scheme intended to deprive policyholders of “tens of millions of dollars of first-party insurance coverage.” Specifically, the lawsuit, which was recently removed to federal court in Kentucky, criticizes State Farm’s alleged forgery of uninsured/underinsured motorist coverage rejection forms and concealment of available household coverage from claimants.

Expounding on the forged documents allegation, the case argues that State Farm trains and instructs its insurance agents to forge policyholders’ signatures on rejection forms for uninsured motorist (UM) and underinsured motorist (UIM) coverage. The complaint points out that this type of coverage is required in many states, including Kentucky, and is tacked on to most insurance plans unless insureds choose to opt out. Rejections of UM or UIM coverage are not typical, the lawsuit adds, and State Farm’s alleged practice of forging signatures on rejection forms robs policyholders of valuable, yet relatively cheap, coverage.

“In many of these cases,” the complaint reads, “State Farm intentionally deprived its insureds of the only insurance available to them after an uninsured driver caused injury to State Farm’s insured, thereby leaving the insured with no coverage at all.”

These "nefarious tactics” notwithstanding, the lawsuit goes on to accuse State Farm of working at cross-purposes with claimants by concealing additional coverage available under household policies. The case explains that in Kentucky, a household may “stack” first-party insurance coverage available under several automobile policies and thereby increase coverage for any given claim.

“For example,” the complaint reads, “if a household garages three (3) vehicles of relatives and separate underinsured coverage premiums are paid on each vehicle in the household, a claimant who lives in the household would be entitled to stack, or add together, the coverages on three policies. Thus, if each policy provided $100,000 of underinsured motorist coverage, the claimant would be entitled to $300,000 in underinsured motorist coverage.”

When an insured files a claim with State Farm, the insurer, the suit alleges,  neglects to search for or even conceals other available household policies under which the claimant may receive additional coverage. Unaware of these “stackable policies,” claimants are denied insurance coverage to which they’re entitled, the case says.