Farmers Insurance Settles Lawsuits over Oklahoma Earthquake Coverage

Farmers Insurance is paying millions of dollars to settle lawsuits that accused it of cheating Oklahoma policyholders who filed claims for earthquake damage.

Source: The Oklahoman | Published on April 7, 2021

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In the latest lawsuit, Attorney General Mike Hunter complained last week that Farmers violated state consumer protection laws and unjustly enriched itself at the expense of Oklahomans.

"In the course of its business, Farmers denied claims for insurance coverage for earthquake-related property damage based on ... reports generated by Farmers' hand-picked engineers, inadequately trained claims adjusters and damage attributed to non-seismic causes," the AG complained.

Judge signs off on $25 million settlement

A Pottawatomie County district judge on Friday signed off on a $25 million settlement of that lawsuit. Other lawsuits against Farmers were settled under confidential terms, attorneys said.

The $25 million settlement in the consumer protection case covers approximately 1,000 claims made by policyholders not involved in the other lawsuits. Under the settlement, Farmers will send those policyholders written notice that their claims have been re-opened for review. An independent administrator will make the final decision.

Hunter and Insurance Commissioner Glen Mulready announced the $25 million settlement Monday. Farmers could have to pay more later based on the independent administrator's determinations. It also could get money back.

Farmers continues to deny wrongdoing

Farmers is well-known by its slogan, "We know a thing or two because we've seen a thing or two." In a statement Monday about the state's consumer protection case, it continued to deny wrongdoing.

For over 90 years, Farmers has built its reputation as a leader in insurance by providing industry-leading products and services to the customers we’re privileged to serve," communications director Luis Sahagun said.

"We take great pride in acting with integrity and evaluating and responding to all claims promptly, thoroughly and fairly," he said.

"We believe the actions Farmers has taken with respect to earthquake claims in Oklahoma are in good faith and correct. It is important to emphasize that Farmers has not admitted to any wrongdoing in this settlement, and our decision to settle should not be misconstrued as an admission that we believe any claims were improperly denied.

"This settlement was reached in the spirit of resolving these issues fairly and efficiently, and because we did not believe that a drawn-out legal process was in the best interest of anyone involved — including our policyholders in Oklahoma."

Earthquakes in Oklahoma no longer rare

Severe earthquakes once were rare in Oklahoma. Over the last decade or so, that changed.

Increases in both frequency and severity of have widely been blamed on saltwater disposal operations associated with oil and natural gas production. In February, the Oklahoma Corporation Commission directed operators of five saltwater disposal wells near Covington to cease operations after a 4.2-magnitude earthquake.