California Insurance Commissioner Dave Jones supports the judge’s decision to reduce premiums.
State Farm insurance rates in California may soon be on their way down following a judge’s ruling. That said, homeowners, condo and renters insurance policyholders will need to wait to know if they will also get refunds. That will depend on the outcome of a lawsuit.
The judge ruled that State Farm is required to comply with a state order for reducing its rates.
That same judge said that while State Farm insurance rates must be reduced, the insurer can delay repaying customers. Insurance Commissioner Dave Jones alleges that the insurance company overcharged its customers. That said, the insurer intends to challenge the commissioner’s authority to demand the refunds under Proposition 103. The judge’s decision to delay the requirement for the repayments provides the insurer with enough time to pursue its challenge.
In November, Jones issued an order for State Farm insurance rates to be reduced retroactively to July 2015.
In response, State Farm filed a lawsuit, arguing that rates cannot be reduced retroactively. The insurance company requested that the judge delay both the rate reductions and the refunds until it can have the opportunity to see the outcome of the lawsuit.
Judge Katherine Bacal ruled that State Farm is required to move forward in cutting its rates. She stated that requiring consumers to continue paying excessive rates would be harmful to the public. However, she also stated that “There is no real harm in delaying payment of relatively small refunds, especially if policyholders would eventually be paid in full, with interest.”
The refunds affect an estimated 1.7 million policyholders. As the refund total is expected to be around $100 million, it means the customers will each receive an average of $60.
Insurance Commissioner Jones released a statement in which he expressed his approval of Bacal’s decision. He also said he is seeking to be certain customers who are owed refunds will not be missed in the meantime that it takes to achieve resolution in the lawsuit. He feels this is important as it may take years for the State Farm insurance rates refund legal battle to achieve its final outcome.