Named plaintiffs Jeffrey and Lydia Varboncoeur, from Columbus Junction, Iowa, and Luis and Liovigilda Rios, of Burlington, Iowa, allege that State Farm treats its policyholders “in a materially different manner for purposes of loss evaluation, negotiation and adjustment, depending upon whether the insured has a State Farm claims history.”

The couples, whose homes suffered hail damage in separate storms last year, allege that because of their prior claims they were paid or offered loss payments below the actual cash value of their most recent losses. The lawsuit alleges that the payments were “substantially below what the insured would have received … for the same loss and/or the replacement cost value under the same policy if the insured had no claims history.”

The Varboncoeurs’ claim stems from an August 28, 2003, hail storm that damaged their home. Though it was allegedly considered a “covered loss” by State Farm, the damage was estimated at below the couple’s $250 deductible, so they were offered no money in their initial loss payment proposal. After they objected, they were offered a second loss payment of $998.84. The same day they received the second offer, they allegedly received an unsolicited check for that amount. A roofer retained by the couple allegedly estimated the damage at more than $4,000. State Farm ultimately sent a check for $1,900. Less than a month later, the family received a letter detailing their claims history over the past seven years.

The Rios’ home was damaged on May 8, 2003, when a hail storm swept through Burlington. The damage also was determined to be a “covered loss,” according to the lawsuit. State Farm estimated the damage at below their $500 deductible, and offered no money for the initial loss payment proposal. After the family objected, the company issued a second damage evaluation and allegedly issued an unsolicited check of $1,040.53. The same day they were sent a letter detailing the “overall claim activity” of the family over the past 10 years—the letter also allegedly indicated that their policy would not be renewed. In another parallel to the Varboncoeurs’ experience, the Rios’ roofer estimated the damage was more than $3,660.

Thereafter, Luis Rios allegedly polled his neighbors who also were State Farm policyholders and had suffered roof damage in the same storm. He discovered none of the others had a claims history and “no one received the ridiculously low first loss payment proposal, the dramatically higher subsequent loss payment proposal and no one was faced with questions about claims histories or appraisal process pressure tactics.”

The action alleges that State Farm trains its claims adjustors to treat those with claims histories differently and “to under-quote the initial loss payment proposal, often in an amount below the known deductible.” Adjustors are also trained to persuade policyholders not to challenge the loss payment proposal, according to the lawsuit.