State Farm, Kentucky Reach $1.35M Settlement

State alleged insurer didn’t tell policyholders about available UM/UIM benefits.

Evelyn Pimplaskar
Evelyn PimplaskarEditor-in-Chief, Director of Content
  • 10+ years in insurance and personal finance content

  • 30+ years in media, PR, and content creation

Evelyn leads Insurify’s content team. She’s passionate about creating empowering content to help people transform their financial lives and make sound insurance-buying decisions.

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MacKenzie Korris
MacKenzie KorrisInsurance Copy Editor

MacKenzie Korris is an insurance copy editor with years of experience in print and digital media. He strives to craft actionable, inclusive copy that fosters smart decision-making through reader autonomy. He has a journalism degree from Saint Louis University.

Published December 6, 2023 at 11:00 AM PST | Reading time: 2 minutes

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State Farm, the largest U.S. auto insurer by market share, and the Kentucky attorney general’s office have reached a settlement over allegations that the insurer failed to adequately inform customers about available uninsured/underinsured motorist coverages.

Under the agreement, State Farm will pay $1.35 million to reimburse the commonwealth for the cost of its investigation into the allegations, according to a press release from Attorney General Daniel Cameron’s office.

Allegations against State Farm

As early as 2018, State Farm discovered that some of its claims representatives failed to disclose to policyholders with auto claims UM/UIM coverage available to them, according to the settlement agreement. In 2019, the attorney general’s office opened an investigation into the issue.

That year, State Farm voluntarily issued additional payments to affected claimants.

The state also alleged that some State Farm agents declined UM/UIM coverage on behalf of policyholders without confirming the customers didn’t want the coverage. While Kentucky doesn’t require drivers to carry UM/UIM coverage, it does require insurers to offer it and confirm that policyholders have declined the coverage if they don’t want it.

In 2019, State Farm reached a settlement in a class-action lawsuit on the coverage issue.

State Farm’s remediation steps

Ultimately, State Farm learned that an employee at a Louisville, Kentucky, agency had signed UM selection/rejection forms without policyholder authorization. The employee was fired, and the agent retired, according to the settlement.

State Farm provided affected policyholders with free UM coverage at limits equal to their policy’s liability limits through the term of their current policy. It also sent letters to other policyholders of the Louisville agent asking them to confirm in writing whether they wanted or rejected the coverage.

What’s next

Both the settlement agreement and the attorney general’s press release acknowledge that State Farm was cooperative and acted in good faith throughout the investigation. The agreement is not an admission of liability or wrongdoing, the attorney general’s office said.

Additionally, State Farm has “strengthened its notification policies, trained staff on revised claim procedures, and implemented a database search tool to identify available coverages under household automobile insurance policies,” the attorney general’s office reported.

The insurer will also aim to begin offering multi-car insurance policies in Kentucky.

“I’m grateful to State Farm for working with us to come to a fair resolution and for taking concrete steps to ensure something like this does not happen again,” Cameron said.

Evelyn Pimplaskar
Evelyn PimplaskarEditor-in-Chief, Director of Content

Evelyn Pimplaskar is Insurify’s director of content. With 30-plus years in content creation – including 10 years specializing in personal finance – Evelyn’s done everything from covering volatile local elections as a beat reporter to building fintech content libraries from the ground up.

Before joining Insurify, she was editor-in-chief at Credible, where she launched and developed the lending marketplace’s media partnership’s content initiative and managed the restructuring of the editorial team to enhance content production efficiency. Formerly, as tax editor for Credit Karma, Evelyn built a library of more than 300 educational articles on federal and state taxes, achieving triple-digit year-over-year growth in e-files from organic search.

Her early career included work as a content marketer, vice president and managing officer of a boutique public relations agency, chief copy editor for 14 weekly Forbes publications, reporting for large and mid-sized daily newspapers, and freelancing for the Associated Press.

Evelyn is passionate about creating personal finance content that distills complex topics into relatable, easy-to-understand stories. She believes great content helps empower readers with the information they need to make important personal finance decisions.

MacKenzie Korris
Edited byMacKenzie KorrisInsurance Copy Editor
MacKenzie Korris
MacKenzie KorrisInsurance Copy Editor

MacKenzie Korris is an insurance copy editor with years of experience in print and digital media. He strives to craft actionable, inclusive copy that fosters smart decision-making through reader autonomy. He has a journalism degree from Saint Louis University.