State Farm Is Not a Good Neighbor

Over my many years in the insurance industry, I’ve become acutely aware of the importance of service when a customer makes an insurance claim. The way an insurance company treats customers during the claims process speaks deeply about their guiding principles and dedication to their obligations. So imagine my surprise when State Farm refused to pay certain obligations during a claims process in which I was involved as a third party.

Let’s start from the beginning of the incident. I was sitting in a parking lot, about to head home, when another patron of the shopping center backed into my driver side door with her car. This is one of the most basic, common accidents that insurance companies see.

Considering that no one was hurt, nothing was done with malicious intent, and I had obtained the other driver’s information, I thought I would spare her the ticket. As she was an older woman who didn’t speak English very well, I couldn’t bring myself to report the incident to the police. So she and I headed our separate ways, expecting all of the claim to be handled by State Farm, as their client was at fault.

The first instance of trouble began during the negotiations about where my car would be repaired. State Farm had insisted on my car being repaired at an independent body shop. There’s nothing wrong with using an independent body shop to repair your vehicle if you outright own it, but my vehicle is a lease. I’m responsible for returning the vehicle to the parent company in good shape with all genuine parts. Allowing an independent body shop to make the repairs meant that I could no longer guarantee that the car’s brand integrity was in place.

My insurance company insisted that State Farm cover my car’s repairs through the brand owned body shop. I had no car during this time, which was around Christmas. The holidays are some of the busiest times for my business, and not being able to easily access clients was a significant hindrance. State Farm finally agreed to these terms, but only after significant time and effort spent convincing them. I hoped that it was the last issue I would find during this claim, but that wasn’t the case.

The next circumstance I found myself in was obtaining a rental car while my car was in the shop. As someone who travels for business often, I’m fairly familiar with the process, so I expected nothing out of the ordinary. I showed up at the rental car facility and picked a car that wasn’t quite the same level as my car, but I thought fine, at least it was large enough to be conducive to my business necessities.

After I had the rental car for two days, I was informed by State Farm that they would not be paying for a vehicle conducive to my business, but rather a smaller one. This was an issue. I require a mid-size vehicle because I often pick up my clients to personally bring them to meetings or events. Their claim that they would not allow me to rent a car similar to my business car was confusing to me. After all, I know that it is the industry standard to provide a vehicle that is of "like kind and quality."

Finally, I even turned in the car early because I had a meeting out of town. This saved State Farm money as they wouldn’t have to rent the car to me for the remainder of the time it took for my business car to be repaired. I was upset by the fact that I received no credit for the less time that I was in possession of the car.

That is not how an insurance company is supposed to handle claims. I should have been given a car that was of "like kind and quality" as well as permitted the number of days it took to repair my car. I couldn’t believe they refused to pay the bill they were obligated to pay.

So here I am, having wasted hours of time and hundreds of dollars hassling over what are supposed to be basic customer services during an insurance claim. State Farm is by far the most difficult insurance company I’ve ever dealt with for such a basic claim, and with over 50 years in the insurance business, that’s truly saying something.

As always, I recommended being wary from whom you buy insurance. The way an insurance company presents itself during the time of purchase doesn’t always match up with how they treat you during a claim.

Ultimately, I think this is an indicator of State Farm’s business practices. If they are willing to be difficult over these common insurance industry standards, imagine their conduct if there were a larger, serious claim. After my experience, my opinion is that State Farm is not like a good neighbor, despite their slogan.

Richard S. Bernstein, CEO of Richard S. Bernstein & Associates, Inc., West Palm Beach, is an insurance advisor for high net worth business leaders, families, businesses, municipalities, and charitable organizations. An insurance advisor to many of America’s wealthiest families, he is a writer, trusted local and national media resource and expert speaker on estate planning and health insurance. Visit his website at www.rbernstein.com. To read more of his reports — Click Here Now.