Farmers Ranked One of Ten Worst Insurance Companies in America

Farmers Insurance Company was ranked one of the ten worst insurance companies in America by the American Association for Justice (AAJ) for its claim handling practices in the auto and homeowners insurance industry. To learn more about the AAJ report which names the ten worst insurance companies in America, click here.

Farmer’s bad faith insurance practices

According to the AAJ report, Farmers, which is owned by the Swiss company Zurich Financial Services, has been accused of bad faith insurance practices, such as:

• Engaging in unfair business practices. Farmers has been accused of providing its employees with incentives such as gift certificates and pizza parties for keeping claim payments low and dissuading angry policyholders from contacting attorneys.
• Refusing to pay claims in full. The insurer has been sued for failing to pay policyholder claims in full and has been investigated by the insurance departments in several states. It was discovered that Farmers was using the claims software, Colossus, to calculate payments instead of looking at the individual claim.
• Increasing premiums. In 2007, California Insurance Commissioner Steve Poizner fined Farmers $3.4 million for increasing policyholders’ premiums after they made claims for their intended purpose.

FreeAdvice.com survey: 41% of Farmers customers very unsatisfied

According to customer satisfaction ratings on FreeAdvice.com, 41% of Farmers customers are very unsatisfied with the insurer. Here’s how survey respondents rated the insurer:

Extremely Satisfied: 26%
Very Satisfied: 9%
Somewhat Satisfied: 12%
Unsatisfied: 13%
Very Unsatisfied: 41%

Customers posted the following comments about Farmers on the website:

• [Our] agent did not turn in policy protection increase and address change to [the] underwriters, but cashed my check and sent me a declaration of insurance. Now, after [my] business suffered 80% loss due to water damage from frozen water pipes, insurance company will not honor policy.
• We have been Farmer’s clients for over 20 years. Earlier this year we had water damage due to a leak in our roof caused by a blown-off shingle. The repairs came to less than $2000. Our policy just went up 35%! 20+ years without a SINGLE claim and we’re penalized $500 a year for 3 years. Plus, our agent is not very helpful and has the personality of a rock. I am currently getting quotes from other insurers. I’ve had enough.
• [They] low balled everything and misled me when I made the initial claim. Hard to reach contacts, no help from agent.
• The worst service ever. Trying to get answers to questions is like pulling teeth. Requests for information, other issues go answered. One needs to call several times regarding the same issues… enough! We are moving on to another company.
• They cannot be trusted. They make up the rules as they go along and it is impossible for them to tell the truth. They pay these people to keep from paying you what you are owed for your loss. Shop around and stay far away from Farmers.

If Farmers has denied or delayed your valid claim, they may have acted in bad faith. Contact an attorney whose practice focuses in this area of the law. Consultations are free, without obligation and strictly confidential.

Farmers Insurance: Case Studies on Unethical Insurance Practices

Case Study 1: Liability Insurance for Farmers Insurance

Farmers Insurance, ranked as one of the ten worst insurance companies in America, faced reputational and financial consequences due to its alleged bad faith insurance practices. This case underscores the importance of liability insurance for insurance companies.

Liability insurance would have provided coverage for legal expenses, settlements, and judgments resulting from claims of bad faith, protecting Farmers Insurance from significant financial losses and helping to restore its reputation.

Case Study 2: Professional Liability Insurance for Claims Adjusters

Claims adjusters play a critical role in insurance companies, and their actions can impact the company’s reputation and legal liability. In the case of Farmers Insurance, the alleged bad faith insurance practices may have involved the actions of claims adjusters. By having professional liability insurance specifically tailored for claims adjusters, Farmers Insurance could have mitigated the risks associated with individual adjusters’ actions.

This insurance coverage would have provided protection against claims arising from errors, omissions, or negligence in the adjustment process, safeguarding the company and its adjusters from personal liability.

Case Study 3: Reputational Risk Insurance

The negative publicity and customer dissatisfaction resulting from Farmers Insurance’s ranking as one of the worst insurance companies highlight the importance of managing reputational risk. Reputational risk insurance, also known as crisis management insurance, helps companies address the financial and reputational consequences of adverse events.

With this type of coverage, Farmers Insurance could have obtained assistance in crisis communication, public relations, and legal representation to mitigate the damage to its reputation and regain customer trust.