Farmers Insurance class action lawsuit over interest rates moves forward

Farmers Insurance class action lawsuit overview:

• Who: A Washington federal judge denied Farmers New World Life Insurance Co.’s motion to dismiss a proposed class action lawsuit.
• Why: The court found the plaintiff plausibly alleged the insurer overcharged universal life policyholders and underpaid interest on their accounts.
• Where: The Farmers Insurance class action lawsuit is pending in Washington federal court.

A Washington federal judge has refused to dismiss a proposed class action lawsuit claiming Farmers New World overcharged universal life insurance policyholders and shortchanged them on interest.

U.S. District Judge Jamal Whitehead ruled on Oct. 13 that plaintiff Sheila Marino plausibly alleged breach of contract, breach of the implied covenant of good faith and fair dealing and violations of Washington consumer protection law. Farmers New World is a subsidiary of Farmers Group Inc., which is owned by Zurich Insurance Group.

Marino, an Illinois resident, claims she bought a Farmers universal life insurance policy with a $100,000 death benefit in 1988. Unlike traditional life insurance, the policy has no fixed monthly premium. Instead, policyholders deposit money into an interest-bearing account, and the insurer deducts monthly charges from it to cover the cost of insurance.

Marino claims Farmers New World inflated the policy’s monthly risk charge with factors unrelated to mortality and failed to lower it as mortality rates improved. She also alleges the insurer credited only the guaranteed minimum interest rate of 4.5% for the 2023-2024 policy year, even though its 2023 interest earnings were substantially higher.

Marino filed the Farmers Insurance class action lawsuit in Washington state court in October 2025 before the insurer removed it to federal court. 

The plaintiff wants to represent a class of individuals in the United States, or their estates, who own or owned a Farmers New World life insurance policy with a risk or insurance-cost deduction, a death benefit and an interest-bearing savings component.

Judge: Farmers universal life insurance risk charge could mislead policyholders

Farmers New World argued the policy let it set the risk charge at any level below the guaranteed maximum rates. Judge Whitehead disagreed at this stage, noting that the policy describes the charge as paying for the “risk of loss” without tying it to specific factors. “But Farmers New World drafted the policy and chose to call the charge a ‘risk charge’ that pays for the risk of loss, and a reasonable purchaser could take that description at its word,” the judge wrote.

The court also found plausible the claim that Farmers shortchanged universal life insurance policyholders on interest because the policy allows rates above the 4.5% floor.

The judge rejected the insurer’s argument that Illinois law applies, which does not recognize an independent claim for breach of good faith and fair dealing. He also lifted a stay in the case and will issue a new order addressing early settlement.

In other recent class action rulings, a California federal judge denied a motion by car company Toyota to dismiss claims it failed to timely repair defective second-row seat rails in the 2025 Toyota Sienna minivan.

Do you have a universal life insurance policy with Farmers New World? Let us know in the comments.

The plaintiff is represented by Joshua H. Haffner, Alfredo Torrijos and Trevor Weinberg of Haffner Law P.C.

The Farmers Insurance class action lawsuit is Marino v. Farmers New World Life Insurance Co., Case No. 2:25-cv-02200, in the U.S. District Court for the Western District of Washington.

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