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State Farm, one of the country’s largest homeowners insurance providers, is now on the clock in Oklahoma to submit documents revealing details about its internal underwriting and claims practices in a lawsuit that could ultimately affect millions of policyholders nationwide.
A lawsuit involving Oklahoma residents Don and Brenda Foster, stemming from a continued dispute over a homeowners insurance claim through State Farm submitted in 2021 entered its latest chapter during a hearing Friday, Jan. 23, in front of Cleveland County District Judge Thad Balkman.
Plaintiffs allege State Farm’s in-house adjuster performed an improper and inadequate investigation that confirmed the home sustained covered damage from the storm, but didn’t find any damage to roof shingles or the interior.
The lawsuit, filed in November 2023 by Marr Law Firm, Mansell & Engel and Glass & Tabor, accuses State Farm of breach of contract and improper claims handling, bad faith, fraud, negligent procurement and punitive damages, alleging State Farm followed a company-wide practice of underpaying wind and hail claims, by redefining covered damage to avoid full replacements.
The Foster case is one of many lawsuits State Farm faces due to their homeowners insurance practices in Oklahoma, where some experts, including the state’s insurance commissioner, point to weather-related claims steadily driving up insurance costs.
A 2026 report from LendingTree released this week found home insurance costs consumers an average of 9.3% of household income, the highest share nationwide. Additionally, the report found home insurance premiums in the state have increased 54.5% since 2020.
But Attorney General Gentner Drummond is among those who suspect there’s more to the story about Oklahoma’s high insurance premiums than severe weather alone.
Drummond in December was granted intervention in another case in Oklahoma County, Hursh v. State Farm, a lawsuit seen as key among hundreds of similar cases against the company pertaining to its “Hail Focus Initiative,” which the AG says involves secretly substituting restrictive standards to deny or reduce payouts. The Foster lawsuit is said to be further along procedurally. Discovery is already compelled, but State Farm asked the court to reconsider.
“Oklahomans can weather inflation and Oklahoma storms, but they cannot withstand a system in which they are charged more while effectively insured less. Inflation and weather do not explain, let alone justify, the widening gap between what Oklahomans pay and what they receive.”
Judge denies motion to reconsider discovery order
The court in a previous hearing issued a discovery order for State Farm to produce documents related to its programs used for underwriting and claims.
State Farm uses the tool 360Value, created by Verisk Analytics to set property coverage limits, alongside Xactimate for estimating claims evaluations. The tools have been criticized in lawsuits across the U.S., including the Foster case in Oklahoma, for potentially producing false values.
Jeff Marr, one of the attorneys representing the Fosters, said 360Value used about 80 characteristics to value a home, but State Farm now uses a simplified version that’s customized for them, and it doesn’t include enough information to provide an accurate value of a property.
The company has faced legal action and scrutiny in California regarding its use of 360Value, and the San Francisco Chronicle reports investigators found the tool frequently underinsured homes destroyed in wildfires by 25% or more, along with reports of agents lowering quality grades to decrease policy costs.
State Farm filed a motion to reconsider the court’s November discovery order, claiming the production of their program documents was “too burdensome and costly,” and “overbroad.” The motion was taken up at Friday’s hearing.
Marr said the tool documents could play a critical role in the Foster case, but State Farm asked the court if they could be produced in PDF files, as opposed to the program’s native format, which would show entry history among other details.
If cost is an issue for State Farm, Marr argued Friday that it would be cheaper to produce the court-ordered documents in their native format, rather than converting them all to PDFs. Additionally, he said the native format is the way the documents were maintained “in the ordinary course of business,” and it would allow for the court to see what State Farm considered, disregarded and verified.
“Last year, as a result of this scheme, State Farm had record profits: $145.2 billion record net worth, according to them, $24.4 million in CEO compensation, and $1.1 billion in advertising spend,” Marr said standing before Balkman Friday morning. “Maybe they could just use some of the money they spend on advertising about what a good neighbor they are to help them produce these documents.”
State Farm maintains cases like the Foster lawsuit are nothing more than fishing expeditions, but Marr said mounting court cases suggest the contrary.
Andrew Morris of McAfee & Taft, who represents State Farm in the Foster lawsuit, said he doesn’t see how the program documents are relevant when “there’s no allegation that the amount of coverage available to the Fosters was less than the amount needed to make the repairs.”
Balkman said he considered discovery arguments and decided to deny State Farm’s motion to reconsider because the defendant’s argument about burden wasn’t convincing, partly because discovery has been previously produced. He also addressed the PDF issue, ordering State Farm to produce their program data in its original format.
What’s next in the case?
State Farm now has until April to produce the documents, Marr said after the hearing. He hopes the case will be headed to trial by summer.
Oklahoma is a file-and-use state, meaning insurance companies can implement new rates or rating factors directly after filing them with the Oklahoma Insurance Department, as opposed to waiting for prior approval. Marr said that’s partially what makes the process at issue possible. He outlined how he perceives that model, which he argues doesn’t actually define what is and isn’t damage in its policies. He believes the process starts with raising rates.
He said the recipe for success is to just “do it, and prove it later,” and that’s why Oklahoma has among the highest rates in the country. If companies receive push back, Marr said they can threaten to leave the state.
“The second step is, you manipulate the internal definition of damage. It’s not defined in the policy, so no one’s going to know,” Marr said. “Then you weaponize the claims department and arm them with a new playbook, setting forth tactics to attack the payout of indemnity dollars to policyholders. You call it claim quality improvement or a claim quality enhancement plan, and you refuse to disclose it to any regulator or policy holder.”
Marr said the model is influenced by Haag Engineering, a Dallas-based firm. In a 2006 case out of Grady County, Donald Watkins and Bridget Watkins v. State Farm, the court found State Farm, intentionally and with malice, breached its duty to deal fairly and act in good faith with class members in its use of Haag for claim investigations.
Now instead of using the firm directly, Marr said State Farm trains their adjusters to use Haag’s claims process, which he maintains can lead to reduced payouts. He also said it’s the only firm the company requires training by.
“That’s the reason we were requesting to use depositions we already have, so we can get this to trial, and once it goes to trial, there’s no secrets anymore,” Marr said.
He likens State Farm to a sports bookie.
“You make a bet, and then before the game, they tell you they’ve changed the spread,” Marr said. “It’s no different than changing the damage criteria.”
Marr said he’s tired of going to court with different law firms dealing with the same issues and being told there are none, meanwhile, numerous cases of a similar nature are settled and sealed up.
A May 2025 court filing shows the Fosters were offered a $130,000 settlement in 2025. While settlements are sometimes ideal for plaintiffs, Marr said certain State Farm practices need to be exposed.
“This isn’t just Oklahoma, this is nationwide,” Marr said. “The claims department is not supposed to be used as a profit center.”
In a statement to The Oklahoman Tuesday, State Farm, said they handle each insurance claim with “personalized care and a strong commitment” to making sure customers receive all the benefits they’re entitled to under their policy.
“We work hard to uphold the integrity of every insurance contract and are prepared to share the facts, and bring clarity and context to this matter in court,” the statement reads.
Alice J. Roden started working for Trending Insurance News at the end of 2021. Alice grew up in Salt Lake City, UT. A writer with a vast insurance industry background Alice has help with several of the biggest insurance companies. Before joining Trending Insurance News, Alice briefly worked as a freelance journalist for several radio stations. She covers home, renters and other property insurance stories.