Farmers sued for not covering Oklahoma tornado damage

The leading property/casualty insurer is under legal fire for supposedly mischaracterizing damage to avoid claims payments.

Farmers sued for not covering Oklahoma tornado damage

Insurance News


A family in Oklahoma is attempting to take on leading property/casualty insurance company Farmers after the insurer denied their homeowners claim following a devastating tornado two years ago.

The Becerras lost their home in the tornado that hit Moore, Oklahoma in May 2013. Damage to the property was so great, the walls could move and the roof was caving in. Rather than try to save the home, the City of Moore condemned and demolished it.

The family was shocked, however, when they discovered their homeowners insurance company would not cover their loss.

An engineer for Foremost Insurance – a subsidiary of Farmers – apparently reported that the movement of the walls was not caused by the tornado, but was instead the result of settlement. The claim was denied.

Now, the Becerras are suing the insurance giant in hopes that the court system will compel Farmers to offer fair payment for the damage.

“Any fool can tell that was not the result of settlement,” Jeff Marr, attorney for the Becerras, told local news channel KFOR.

Farmers is standing by its original decision after the Becerras rejected an offer of $750,000 as settlement. The attorney for the company asked the jury pool in the case – which is largely composed of people affected by the Oklahoma tornado – to turn off their “emotional switch” and judge the case fairly.

This is hardly the first time an insurance company has been sued following the 2013 tornado. A class-action lawsuit in Comanche County against Farmers resulted in a jury award of $130 million dollars.

More broadly, the Oklahoma Insurance Department told the news team that nearly 300 complaints were filed against insurance companies after the tornado.

Tornado damage is typically covered under homeowners insurance policies, though statistics from various insurance bodies suggest some policyholders wind up significantly uninsured.

According to a 2008 study from Marshall & Swift, a full 64% of US homes are undervalued for insurance purposes. That number only increased as home values tanked an average 33% in the late 2000s and consumers began looking for ways to save money.

The result? People may not have enough money to rebuild their homes.

In fact, the same study suggests most policies leave homeowners with enough money to rebuild just 81% of homes.

Any renters in the area may be in even more trouble. Only 43% carry renter’s insurance, according to statistics from the Insurance Research Council.

Additional help may come from a presidential declaration of disaster, in which the uninsured or underinsured could receive federal aid. However, individual payments are capped at a little more than $30,000 and the average payment is likely to be much lower.

To mitigate any risk of underinsured homeowners, agents are urged to reevaluate their clients’ amount of coverage every two years, making note of major changes such as home remodeling or roof replacement.

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