The same may be said for many renters insurance policyholders in California.
State Farm homeowners insurance and renters insurance customers in California may soon be receiving refund payments. The insurer is sending the checks to customers as a result of a decision made by the state Department of Insurance.
The California Department of Insurance told State Farm it needed to repay policyholders due to excessive rates.
The department deemed the rates charged to State Farm homeowners insurance and renters insurance customers to be excessive. As a result, about 250,000 policyholders will be refunded a total of $13.3 million. This equates to about $55 each, on average, for the overcharges that occurred from December 8 2016 through February 13, 2017. The announcement of the refunds was made at the end of last week.
The refunds were the outcome of a tense legal dispute about State Farm homeowners insurance rates.
California Insurance Commissioner Dave Jones decided that the insurance company was overcharging its customers and, as a result, must pay them back. It ordered the insurer to reduce its rates beginning on December 8. In California, the commissioner has the authority to make such a decision under Proposition 103. That said, Jones applied this authority for the first time in a way that would also retroactively apply the rate cuts back to July 2015. That decision would have required State Farm to pay a total of about $100 million in refunds to its policyholders.
_________________________Random Success Quotes to Remember ~ "Take up one idea. Make that one idea your life -- think of it, dream of it, live on that idea. Let the brain, muscles, nerves, every part of your body be full of that idea, and just leave every other idea alone. This is the way to success." -- Swami Vivekananda
State Farm Insurance responded with a lawsuit. It argued that the required rate decreases were calculated inaccurately and that the California Insurance Commissioner’s authority does not extend to retroactive rate changes.
In December 2016, San Diego County Superior Court Judge Katherine Bacal ordered the refunds to be paused until the court could make the decision. That said, Bacal also ordered the insurance company to reduce its current rates as per the order issued by the insurance commissioner.
State Farm homeowners insurance and renters insurance worked to meet that requirement but was not able to implement the rate reductions until February 13, 2017. This was because renewal bills are required to be issued at least 45 days ahead of their due date. As a result, State Farm was required to pay refunds to those customers.