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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
So glad to see this suit. I was with Farmers for years and with no claims, my premiums went up significantly at each 6-month renewal. Over 3 years, the premium about doubled and when they tried to raise it even higher last month, I switched to Allstate. I have apples to apples coverage (confirmed by my Farmers agent who tried to keep my business), only losing the accident forgiveness until I earn it with Allstate, for just under half what Farmers was charging me per policy period. After paying for coverage on 3 cars, 2 motorcycles plus renters, it would be nice to recoup some of what I overpaid by not switching sooner.
I had hoe and 2 autos with Farmers from 2000 until 2019 with and never had any claims on the autos. I had one storm damage claim on the house, but they denied it. My credit is excellent >800 and I’m 66 with no illness or limitations. My premiums went up and up and up every year. I switched to Allstate and got the same coverages for over $1000 less per year. Ridiculous.
Home**
So Allstate didn’t raise your rates at renewal….highly doubt it.
All insurance companies raise their premiums to offsets losses from claims. Auto insurance rates in Texas on average increases about 5-7 percent per renewal.
There is no loyalty from insurance companies. Always shop your insurance at renewal.
It’s your fault for not shopping earlier.
Keep me informed, we also had Farmers Insurance…
I have been with Farmers for 4 years now and my rates have almost doubled. Keep me informed.
I’ve been with Farmers,for 30 years. I reside in North, Dakota. I’ve only had 4 claims, of which 2 were hail damage. Usually we have multiple cars, motorcycle or boat and camper, plus our house insured. Our rates seem to continue to increase each time we renew. You’d think our loyalty and only 4 claims, of which 2 were hail damage. Any way to find out if we should have been getting a better deal. About 1-2 years ago, we did get a refund check, they said for overcharges, but our renew rates didn’t go down?
Call your Farmers Agent and ask her/him this question. Its called a friendly review. Its tough to know if you have a cavity without seeing your dentist.
This sounds just like progressive. I been with them 4 years no tickets, no points, credit got better, turned 35, and rates incresed last 3 years. This last increase was 80 dollars more. I pay 106 liability on a 16 year old car!
Age of car has no relationship to the cost of the liability coverage. only the comprehensive and collision and perhaps the Uninsured motorists property damage coverage. If you are with Progressive I imagine you don’t have these coverages or if you do they are at $1,000 deductibles. This is because you don’t get an agent that can give you real advice on pricing and coverage options with the online and 1800 companies.
This sounds just like Comcast. They get you in there with a low rate, then they jack up price on you. Then they come out with a much lower rate for new customers only and refuse to give it to current customers. I don’t trust any of these big companies!
we dumped Farmers Insurance car insurance after they added our son to the policy when he turned 16. He didn’t even have a permit, no contact with us, just all of a sudden received a bill that included having him as a driver. Still mad about it and it’s been years since it happened.
I have Farmers insurance in Oregon my rates went up last year to. My agent told me everyone’s did. How do I find out if the same thing is happening to us in Oregon ?
YES! This is me. Just cancelled my two auto policies after being a customer for 20 years. The prices for my 13 and 3 year old cars were almost 200 a month and I have no kids, no tickets,etc. Switched to Costco insurance and saving almost $90 a month.
Costco doesn’t sell insurance they market for an insurance company, do you know which one? kind of important information. buying cheap gets you cheap.