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Auto insurance company Farmers faces a putative class action lawsuit alleging it discriminates against longtime customers by offering preferential pricing to new customers while raising rates on its current customers.
Lead plaintiffs Charles Grigson and Robert Vale allege in their class action lawsuit that Farmers Texas County Mutual Insurance Company “betrayed” their policy holders through “illegal and discriminatory” policy regimes in early 2016.
The plaintiffs claim that when Farmers rolled out its policy pricing, it unfairly offered new customers lower rates and did not inform current customers about them. Further, argue the plaintiffs, Farmers raised rates on current policy holders.
Grigson alleges that he has been a Farmers Texas auto policyholder since 1981. He says that in January of 2016 he was insured by two Farmers auto policies, but was never informed about the available lower premium rates.
In early May, Grigson says became aware of the lower rates and attempted to apply, but was told he was ineligible because he was not a new customer.
Similarly, Vale alleges in the class action that he’s held a Farmers auto policy since 1997. He says his policy expired in May of 2016, but he was not made aware of the preferential pricing policy at the time of renewal and paid a higher rate.
Both plaintiffs were eventually allowed to apply for the lower policy rates, according to the complaint.
“In nearly all cases,” allege the plaintiffs in the class action, “the premium rate that an existing [Farmers] policyholder pays is higher than the premium rate a new customer would pay under FSPA for identical or virtually identical coverage.”
“The rate difference between FSPA and FA2 can be as high as 20-40%, or even higher,” continue the plaintiffs. “In some cases, individuals and/or families may save more than $1,000 for every six (6) month policy period by switching to FSPA.”
According to the class action lawsuit, the pricing regime that favors new customers violates Texas State Law. Additionally, the plaintiffs allege that there was no “actuarial basis” for the preferential pricing for new customers.
The plaintiffs say that they, and other existing Farmers policy holders, have suffered “significant economic damages” as a result of the pricing regime. “Existing [Farmers] policyholders have paid, and continue to pay, higher premiums than they should. Through its unfair discrimination, FGI is forcing Farmers Texas’s most loyal, existing FA2 policyholders to effectively subsidize the lower FSPA rates offered only to new Farmers Texas customers.”
According to the class action lawsuit, Farmers intimidated its insurance agents into concealing the better rates from existing policy holders. This will erode the trust between the policy holders and their agents, say the plaintiffs.
The plaintiffs are seeking an injunction against Farmers to stop the preferential pricing regime. Additionally, they are seeking damages and/or restitution, pre- and post- judgment interest and attorney’s fees and costs.
The plaintiffs seek to represent a Class of Texas Farmers auto policy holders affected by the preferential policy regime initiated on Jan. 4, 2016.
The plaintiffs are represented by Michael L. Slack, John R. Davis, and Paula Knippa of Slack & Davis LLP, Joe K. Longley of the Law Offices of Joe K. Longley, and Roger N. Heller and Jonathan D. Selbin of Lieff Cabraser Heimann & Bernstein LLP.
The Farmers Preferential Auto Insurance Pricing Class Action Lawsuit is Grigson, et al. v. Farmers Group Inc., Case No. 1:17-cv-00088-LY, in the U.S. District Court for the Western District of Texas, Austin Division.
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23 thoughts onFarmers Class Action Says Pricing Policy Favors New Customers Only
I agree with Steve Abraham. You need to have the “friendly review” done before renewal to see if you qualify for any discounts. It’s up to the consumer to advocate for yourself to get the best pricing. My settlement amount was $151.23 and I’m a longtime Farmers customer. I’m currently enrolled in their Smart Plan after contacting my agent after getting a lower quote from AAA. He was able to match the AAA rate which is saving me $100/month.
Got a check in the amount of 2 cents!!! WTH???!!!!
Multiple cars and homes insured with them for over 30 years.
I should of left Farmers years and years ago. My loyalty to our agent cost me a lot of $$$. Obviously they have no loyalty to long term customers. It is the same with everything now, phone services, cable/internet, electricity. If you are willing to take the time to switch every year you will be rewarded. Otherwise you will be screwed.
Got ours, it was .24 cents. 24 pennies.
I will be depositing.
We, the consumers, got screwed all the way around. $11.18 settlement check, stick it up your A$$!
I too like so many others had Farmers auto insurance for years (19 years in our case) and noticed the auto premiums (for 2 vehicles) exponentially increasing each year. I switched by going to an independent insurance agent (independents can shop around with numerous companies and find the best deal for you) and went with a grade A insurance company and our auto AND the hazard insurance on our house COMBINED was only $173 more than JUST our auto insurance with Farmers! And to put this in perspective, our house is in an historical district & worth nearly $400k – so it’s not like it was just a starter home under $100k. Once again, our AUTO AND HOME TOGETHER was less that $200 what our AUTO ALONE was with Farmers. Let that sink in!
Just received my little $43 Check for this Charles Grigson ordeal, had to look this up to see what it was all about.
I too was a 28 Year LOYAL Policy Holder of Farmers Insurance. Even had the same Agent for that 28 years. I went through maybe 10-12 Vehicles the first 15-20 years buying New once a year – year 1/2, so I kind of accepted the INCREASE in pricing of my policies over the years. I finally settled down, paid off a vehicle, and actually drove that same vehicle for 12 years, but after a decade of Policy INCREASES in prices over the years, I started questioning WHY?? Never once was there ever a decrease, Trucks value kept going down, but costs to Insure it kept going up. When my cost to fully insure that 12 old truck that finally hit $1700 a year, and here I was in my mid-50’s with never having laid a claim on that truck the whole time I owned it and insured it through Farmers, I started questioning my Agent over it.
Same answer for 3 Renewals, Truck is older, Parts are getting harder to find, and if it ever was wrecked, Costs would be high, so they must charge Higher Prices. Well, Truck was finally wrecked, almost immediately after I paid my 6 Month $800 Policy Payment, Farmers Adjuster totaled it out, but only tried to pay me 1/5th of what I could have sold the truck for on my own, IF it wasn’t wrecked, with Verifiable Market Place Comps that proved what truck was actually worth. Attorneys are still working on that Claim….
Now, when I bought new vehicle to replace it with, quote from Farmers was outrageous. IF I had put that vehicle on this “existing” policy, $2000 a year to insure it, and since I was a “Current Policy Holder”, they wouldn’t even qualify me to cancel that long term policy and start a new account / policy to maybe Lower my Rate.
Been a Member of AARP for a couple of years, got in contact with them, I am now covered by Hartford for 1/3rd of what Farmers was requiring, and HIGHER Coverage Contents. My 28 Year Agent got all upset with me over this, and almost demanded I bring by the Hartford Policy, IN WRITING, the Contract Itself, to PROVE to her that I wasn’t lying about the price, and to verify my claim. I have lost a “Friend” over this.
Good Riddance Farmers Insurance.
I HAD FARMERS FOR OVER 15 YEARS. 3 CARS FULL COVERAGE AND OUR COST WENT UP EVERY RENEWAL, FINALLY TO BE PAYING OVER $500 A MONTH. I HAD 2 CLAIMS. BUT COST HAD GONE UP EVEN BEFORE THE FIRST ONE. I HAVE RECEIVED 2 CHECKS IN THE MAIL YESTERDAY ONE FOR $25.27 AND ANOTHER $122.70. I HONESTLY THINK I SHOULD RECEIVED MORE THEN THIS. YEARS OF INCREASES. i FINALLY DROPPED THEM AND NOW I GOT COLLECTIONS CALLING ME AND SENDING ME MAIL FOR POLICY THEY SAY WAS NEVER CANCELED.
They did that to me too. I had to send them documentation that I tried to cancel 3x over 4 months. When I called they were rude and tried to act like I didn’t cancel. One time I told the lady I talked to you to cancel 12 hours ago and now you are seeking collections…stop calling me. I switch and am so happy to be done with Farmers. They almost tripled over the 5 years I had them. No accidents or tickets….nothing. Just received a check for about $78. My cost has gone up 3 bucks the couple years I have had Geico. I pay about the same for 2 cars fully insured and my home insurance (with diving board) than 2 cars and renters insurance with Farmers.