State Farm Must Give Up Trade Secrets in Claims Lawsuits, but Under Court Review

The Alabama Supreme Court has opened the window a little wider into insurance carriers’ claims-handling procedures, not only requiring them to be made available in some lawsuits but also to be shared with plaintiffs’ lawyers in similar litigation.

The high court’s decision, in a side issue in Foor vs. State Farm, tempered a lower court’s order requiring State Farm to share trade-secret information on how damage estimates are reduced. The Bullock County Circuit Court’s 2025 decision, in a homeowners’ roof claim dispute, is the latest skirmish in the multi-state war of words between adjusters and policyholder advocates on one side and a few large insurers on the other.

“While we would have preferred a different outcome, we appreciate the meaningful safeguards the Court placed around confidential information,” a State Farm spokesperson said in an email. “The ruling requires recipients of confidential information to abide by the protective order, and preserves the court’s authority to enforce those protections, including requirements to return or destroy materials when those cases conclude.”

The lower court’s decision, allowing significant sharing of confidential claims handling procedures, had generated widespread concern among insurers, business groups and legal organizations.

“The ‘sharing’ provision in the (lower court’s) order relinquishes near-complete control of some of State Farm’s most sensitive information to plaintiffs’ counsel for their unfettered, nationwide use,” reads a friend-of-the-court brief filed by the U.S. Chamber of Commerce and the American Tort Reform Association.

The homeowners, James and Kristina Foor, said a winter storm in early 2024 caused significant hail and wind damage to their roof. A roofing contractor gave an estimate for $9,112, and the Foors filed a claim with State Farm. State Farm offered to settle the claim for $4,059. The Foors rejected that and filed suit, charging breach of contract and bad faith and asking for mental anguish and punitive damages.

“State Farm has a pattern and practice of lowballing roofing claims and, upon information and belief, has implemented a program to reduce roof payouts without regard to the merits of the claim,” the Foors’ complaint argued.