On May 21, 2024, a hailstorm in Tulsa County, Oklahoma, left homeowner Tim Willard with a roof shredded by golf ball–size hail. An adjuster initially concluded the roof needed replacement, but State Farm later denied the claim and canceled his policy. Willard had to borrow and spend his savings to replace the roof so another insurer would write a policy; he later sued State Farm.
Willard’s story is echoed in hundreds of lawsuits across the country alleging that State Farm, the nation’s largest home insurer, has run a covert program since 2020 to reduce payments for hail and wind damage. NPR reviewed nearly two dozen suits and related court records; plaintiffs’ lawyers and Oklahoma’s attorney general say those filings describe a companywide effort to limit full roof-replacement payouts.
Plaintiffs point to two central tactics. First, adjusters are said to apply internal definitions and standards that do not appear in customers’ written policies to deny claims. One repeatedly cited standard is “functional damage,” which plaintiffs say was developed inside the company and used to conclude shingles did not require replacement even when inspectors or homeowners described storm damage. In Wisconsin, Nicole Maziasz says State Farm denied a 2023 hail claim after an engineer retained by the insurer determined there was no “functional damage,” a term not defined in her policy; the Maziaszes later settled for roughly the cost of a new roof and attorneys’ fees.
Second, plaintiffs allege that managers were instructed to review and overturn field adjusters’ recommendations for full replacements so that the company’s internal standards would be applied consistently. In a 2022 deposition, a former State Farm claims specialist said teams were told to deny claims even when adjusters believed payout was warranted; she described having to tell insureds their roofs showed “wear and tear” instead of hail damage. State Farm’s lawyers reject the claim that managers were required to overrule adjusters as a matter of policy.
State Farm, which is defending itself in multiple courts, says the 2020 initiative aimed to improve accuracy in claims handling and correct both overpayments and underpayments. The company told NPR it pays what it owes under policy terms and works to protect customers from predatory contractors and lawyers. In filings, State Farm has disputed characterizations that it secretly changed coverage, describing such disputes as private contract matters rather than misuse of public funds.
Oklahoma has been a focal point of the litigation: more than 600 suits were pending against State Farm there in the spring of 2024, and Republican Attorney General Gentner Drummond has intervened in at least one case. Drummond accuses the insurer of “secretly and fraudulently” withholding information about internal coverage restrictions and says state intervention is necessary because confidential settlements often fail to deter repeat behavior.
The legal battles come against the backdrop of climate change and rising weather risks. Warmer temperatures are fueling more intense storms, floods and wildfires, increasing property damage and contributing to steep insurance rate increases. Since 2021, the average U.S. home insurance cost rose roughly 46%, about three times the rate of inflation. Insurers are also retreating from higher-risk areas; nonrenewal rates climbed sharply between 2018 and 2023 in states such as Florida, South Carolina, California and Oklahoma.
Hail is a major driver of insured losses. The Insurance Information Institute reported that hail contributed to $51 billion in insured losses from severe storms in a recent year, and hail often accounts for as much as 80% of severe-storm claims. State Farm told reporters it paid more than $1 billion for wind and hail damage in Oklahoma over the past two years and described its homeowner policy as among the broadest in the industry.
Plaintiffs’ attorneys argue the insurer gains an advantage by selling policies without disclosing the internal exclusions it uses to evaluate hail damage. One lawyer said the company could avoid much litigation by writing those limitations into policies; another described State Farm’s approach as effectively rewriting contract terms through internal guidance. Industry groups and State Farm counter that aggressive plaintiff advertising and frivolous suits drive up costs for everyone. The Insurance Information Institute has launched campaigns warning of ‘‘legal system abuse,’’ pointing to lawyer advertising as a factor in rising premiums. Plaintiffs’ attorneys reply that regulators often direct consumers to pursue litigation when complaints are unresolved, leaving lawsuits as the only effective recourse.
Regulators and prosecutors have also investigated insurer conduct. Los Angeles County authorities probed allegations that State Farm delayed, underpaid and denied wildfire claims in California. In 2022 the company paid $100 million to settle federal allegations about its handling of Hurricane Katrina claims. Some courts and juries have sided with homeowners: in one Oklahoma federal trial a jury ordered State Farm to pay $325,000 for bad-faith denial of a roof claim plus breach-of-contract damages, and several recent Oklahoma settlements were reported as multi-million-dollar deals, though confidentiality provisions frequently accompany those agreements.
Oklahoma’s attorney general says penalties must be substantial enough to deter future misconduct and is also examining other insurers. The National Association of Insurance Commissioners told NPR that state regulators investigate every formal consumer complaint and often resolve disputes without court action, but that consumers should retain access to the judicial process if they believe state rules were violated.
As extreme weather intensifies and hailstorms become more common across central and eastern states, homeowners face larger repair bills and growing uncertainty about whether insurers will pay. Plaintiffs and some officials say a lack of transparency about internal claims standards erodes trust and can leave households exposed to major financial harm. State Farm insists it follows policy terms and denies illicit conduct; critics say the pattern evident in multiple cases and depositions points to a deliberate effort to minimize roof-replacement payouts and shift costs away from the insurer.