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Worst Auto Insurance Companies: State Farm

Repeat Offender for Abusing Auto Accident Victims Award

Our insurance lawyers want to stress that State Farm is definitely not like a good neighbor, which is why State Farm Mutual Automobile Insurance Company is on Michigan Auto Law’s list of the worst auto insurance companies in Michigan. In my opinion, State Farm Mutual Automobile Insurance Company has been the most aggressive in fighting its customers before paying No-Fault insurance benefits.

And, it has proved to be a profitable strategy – unless you need State Farm insurance benefits.

Profits for State Farm Mutual Automobile Insurance Company increased by nearly 100% from 2009 to 2011. According to the 2011 and 2010 Annual Reports to its policyholders, State Farm Mutual Automobile Insurance Company’s net income increased from $570 million in 2009 to nearly $1.1 billion in 2011.

As an insurance lawyer, I don’t begrudge State Farm for making a profit. But I do blame State Farm for overcharging Michigan drivers. Here’s how the calculation was made: since 1996, auto accident claims in Michigan have declined by 54 percent and the average miles traveled have dropped to the lowest in 17 years. Yet insurance rates continue to skyrocket, as Michigan has the second most expensive car insurance in the nation (right behind Louisiana), according to The New York Times’ April 12, 2010, “Bucks” blog post, “Where Auto Insurance Is Most Expensive.”

Moreover, as noted below, State Farm Mutual Automobile Insurance Company has some of the most expensive auto insurance rates in Michigan.

State Farm was one of those insurance companies that lobbied hard to convince the Michigan Legislature to enact the harshest auto accident injury (threshold) law in the nation in 1995, promising that Michigan residents would reap substantial savings on their premiums as a result. Well, auto accident lawsuits have fallen 54 percent since then, which means insurance companies are saving hundreds of millions of dollars in litigation payouts.

State Farm, where is our savings?

State Farm Mutual Automobile Insurance Company prefers to fight, rather than help, seriously injured auto accident victims

In a recent case, Hannosh v. Varadi, et al., where State Farm’s insured undisputedly rear-ended an innocent driver and the injured driver had to undergo disc herniation surgery, State Farm stubbornly and unjustifiably dug in its heels and refused to offer any compensation to the victim.

By insisting the crash was not severe enough to cause the victim’s obvious injuries, State Farm forced the case to go to trial.

Fortunately for the victim, a restaurant manager whose accident-related injuries had disabled him from working, a Macomb County jury had the wisdom to recognize the injustice that State Farm had committed itself to denying.

The jury returned a verdict in favor of the victim for $1.485 million.

State Farm Mutual Automobile Insurance Company is THE most-complained-about auto insurer in Michigan

Every year for the last five years (2007-2011), State Farm Mutual Automobile Insurance Company has been THE most-complained-about auto insurer among the nearly 80 auto insurance companies doing business in Michigan, according to data from the Michigan Office of Financial and Insurance Regulation (OFIR).

That means that during those years State Farm Mutual Automobile Insurance Company received more consumer complaints than each of the other nearly 79 Michigan auto insurers.

State Farm Mutual Automobile Insurance Company auto insurance prices are some of the most expensive in Michigan

Among Michigan’s largest auto insurers, the auto insurance rates for State Farm Mutual Automobile Insurance Company were among the Top 5 most expensive in all 16 of the major Michigan markets examined in compiling the “Worst Auto Insurance Companies” list.

Sources:

  1. Annual Reports to Policyholders of State Farm Mutual Automobile Insurance Company.
  2. The New York Times’ April 12, 2010, “Bucks” blog post, “Where Auto Insurance Is Most Expensive.”
  3. Insurance Institute of Michigan, 2010 and 2012 IIM Fact Book, “Top Writers of Auto Insurance in Michigan.” (Page 27)
  4. “Insurance Company Complaint Ratios” (“Coverage Type: Automobile”) for 2007 through 2011, Michigan Office of Financial and Insurance Regulation (OFIR).
  5. “2008 Buyers’ Guide to Auto Insurance,” Michigan Office of Financial and Insurance Regulation (OFIR)(Example 3: Pages 16-17).

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