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State Farm Hit for $8 MILLION in Punitive Damages

December 6, 2005 by Jonathan Stein

State Farm has been hit for $8,000,000 in punitive damages in Kansas. Unfortunately, Kansas law has a cap on non-economic damages (non-economic damages are damages for things other than wage loss, medical bills, repair or replacement cost of the vehicle).

Basically, a State Farm insured reported her car stolen. It was found burned. State Farm and the National Insurance Crime Bureau conducted an investigation and reported these two people to the DA. The DA filed charges and a jury acquitted the accused. They turned around and filed suit against State Farm for breach of contract and malicious prosecution. A civil jury found for the plaintiffs and against State Farm.

I say good for the insured. I continue to argue that the insurance industry is overblowing the fraud fear. There is fraud out there. It does raise your rates. Its garbage to think that there is that much fraud out there. Now the insurers are so jumpy they are going after innocent people.

The Kansas verdict should be one more sign to the insurance companies to just do their job and do it well. Leave everyone else alone.

Categories: Auto Insurance, Claims, Law

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