California policyholders might be receiving a refund from State Farm. Why? Well, it turns out the state’s Department of Insurance has deemed the insurance company’s rates excessive, which has prompted State Farm to issue $13.3 million in refunds to many of its California customers.
California policyholders might be receiving a refund from State Farm. Why? Well, it turns out the state’s Department of Insurance has deemed the insurance company’s rates excessive, which has prompted State Farm to issue $13.3 million in refunds to many of its California customers.
So how many customers will be expecting a refund, and how much will that refund be worth? For starters, an estimated 250,000 people are due to receive a refund, many of which average around $55 to cover overcharges between Dec. 8 and Feb. 13, according to the Department of Insurance.
This isn’t just something that popped out of thin air, though. In fact, these refunds “stem from a bitter legal dispute centered on Insurance Commissioner Dave Jones’ decision to order State Farm to cut its rates as of Dec. 8.” It turns out, Jones has the power, under California’s landmark Proposition 103, to issue such as order. And if you think State Farm just nodded their head’s and agreed quietly without a fuss, think again. Rather, the company sued, arguing that “the mandated reductions were based on inaccurate calculations and that the insurance commissioner does not have authority to change rates retroactively.”
From there, a San Diego County Superior Court Judge, Katherine Bacal, decided to put the refunds on hold back in December. However, she did end up ordering the insurance company to “cut current rates per Jones’ order.”
Begrudgingly, State Farm agreed to comply, though said they had to wait until February 13 to cut rates “because insurance renewal bills must be sent at least 45 days early.” However, the Department of Insurance pushed back and threatened the company, saying the decision to wait until February 13 could cost “State Farm more than $2.5 billion in fines,” and ended up filing an order of noncompliance. When State Farm asked the court to intervene, they were rejected, “resulting in the $13 million in refunds.”
When asked about the matter, Jones said:
“We have used all our legal remedies to make sure State Farm’s customers are not overcharged and to make sure that State Farm complies with the rate reduction order. It is past time that State Farm’s ratepayers receive the rate reductions to which they are entitled.”
On the other side of the aisle, State Farm said:
“We appreciate our customers’ patience as we work to resolve the matter. We will continue to comply with the orders of the court.”
Sources:
Have State Farm renters’ or homeowners’ insurance? You may be getting a refund
State Farm issuing millions in refunds to California policyholders
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