Farmers Insurance Exchange has been accused of unfair pricing practices and is reimbursing affected policyholders.
Minnesota auto insurance company, Farmers Insurance Exchange, is responding to accusations of unfair pricing practices with a refund to more than 1,600 drivers in the state. The policyholders affected by the pricing practices in question will be receiving a portion of a $315,000 total amount.
The insurer is providing the refunds in response to an investigation into the way it was setting its rates.
The Minnesota auto insurance provider underwent a pricing practice examination. The Minnesota Commerce Department conducted the investigation into the insurer. The department determined that the insurance company had been charging better prices to homeowners than to drivers who rented their homes. This information was released in a statement from the department last week.
In Minnesota, it is illegal for auto insurance companies to set their rates based on the living status of a policyholder.
In response to the investigation findings, the Minnesota auto insurance company agreed to issue refunds.
A total of 1,620 policyholders were affected by the unfair pricing due to the fact that they rented their homes instead of owning. They will each receive their appropriate portion of the $315,317 total in refunds issued by the insurer. The state Commerce Department also pointed out that the auto insurance company is required to pay a $75,000 penalty.
Furthermore, Farmers Insurance Exchange has been forced to cease its discriminatory pricing practices which favor homeowners over renters. This, according to a recent statement from the agency.
“You should not be forced to buy a house in order to get a fair price on your auto insurance,” said Minnesota Commerce Commissioner Mike Rothman. “It is not only unfair, but in Minnesota it is also illegal for an insurance company to charge more or discriminate against drivers simply because they happen to rent their homes.”
The Farmers Insurance Exchange Minnesota auto insurance company is a part of Farmers Insurance Group out of Los Angeles. Earlier this year, Farmers Insurance was in similar hot water in Texas. There, it asked a state court to dismiss a class action lawsuit which alleged that the insurer’s practices were discriminatory and in violation of the Texas Insurance Code.