Insurer Sued Over Alleged Forgery


A man and his wife have filed a lawsuit against State Farm Fire and Casualty Co. for allegedly forging signatures on insurance forms and destroying documents to avoid paying claims from the 1994 Northridge earthquake.

Two former State Farm employee have given sworn testimony supporting the accusations, and claim such practices are common at the company, according to court documents.

State Farm spokesman Craig Peterson refused to address the lawsuit specifically, but denied the allegations of wrongdoing. “You don’t become the No. 1 insurance company in the country by treating people unfairly,” he said.


The lawsuit was filed by Roderick Taylor and his wife, Krista. The couple purchased a State Farm homeowners insurance policy in 1983. They allege they were told the policy included earthquake coverage but learned otherwise after the Northridge quake, which seriously damaged their $1-million hillside home.

When he originally bought the policy, Roderick Taylor said, “I made it real clear that I wanted our house completely covered, including earthquakes and fires.”

State Farm later produced an insurance document declining earthquake coverage that Roderick Taylor alleges contains a forged signature. “There was a signature on it that wasn’t even remotely close to mine,” he said.

Support for his case has come from the 2nd District Court of Appeal, which ruled a sworn declaration by a former State Farm employee can be admitted as evidence. State Farm attorneys had argued the testimony by Amy Girod Zuniga, who worked in the company’s litigation unit, should be sealed because it violated the firm’s attorney/client privilege.

In her sworn testimony, Zuniga said State Farm knew many other applications had been forged. In 1987, California voters passed Proposition 103, which required insurance firms doing business in the state to offer earthquake coverage. The measure also required policyholders who did not want earthquake insurance to state so in writing.

“I am aware that there were many other State Farm claims arising out of the Northridge earthquake like the Taylors’ involving unauthorized signatures by State Farm agents . . . omitting earthquake coverage,” according to Zuniga’s testimony.



State Farm has since sued Zuniga for breach of fiduciary duty and misappropriation of trade secrets. She could not be reached for comment. The next hearing on her case is scheduled for May 15.

Meanwhile, the Taylors have been unable to finish repairing their home.

“Our house looks like a cross between a Roman ruin and a haunted house,” Roderick Taylor said.

The Taylors’ claim of being misled by their insurance agent is backed by Ina DeLong, who had worked as a State Farm claims agent and supervisor for 23 years.

DeLong, who quit State Farm in protest over the company’s handling of Loma Prieta earthquake claims in 1989, said agents routinely “quoted low prices based on inadequate coverage.”

“If the agent couldn’t get the signature on the declination forms, they would have to come up with one,” DeLong said.

Surreptitiously omitting earthquake coverage, DeLong said, made policy premiums more attractive than policies that included full coverage.

DeLong also accused State Farm of destroying and suppressing internal documents that could later be used as evidence.


That allegation is repeated by former State Farm employee Samantha Bird. She said in a sworn statement to the 2nd District Court of Appeal: “We were instructed to destroy old memos, claim school notes, old procedures. . . . The reasoning behind this is that we do not keep discoverable information that could be asked for in ‘bad faith’ suits.”

The Taylors’ lawyer, Bernie Bernheim, said he hopes a judgment against State Farm would be large enough to change the firm’s behavior.

“That will take a substantial award,” Bernheim said, citing a 1996 suit in Utah that yielded a judgment against the company for $145 million. “It will have to be more than that.”

With more than $55 billion in total assets, State Farm is the 12th-largest business in the United States. The 75-year-old company paid $2.7 billion in claims to more than 116,000 policyholders whose homes were damaged by the Northridge earthquake.