Farmers Insurance To Settle Long-Running Lawsuit
Farmers Insurance may have reached a settlement in a decade-long lawsuit regarding rate increases after mold claims exploded across Texas, prompting the company to substantially increase its rates. The issue caused a complete overhaul of the Texas insurance market.
In the agreement, Farmers denies all wrongdoing, but agrees to issue refunds or premium reductions to current and former customers who used the company between 2000 and 2003. In addition, the company would receive credit for past premium cuts. Customers could expect the refunds and credits to be issued 30 days after the court approves the agreement. Insurance Commissioner Julia Rathgeber and Deputy Attorney General David Mattax have signed off on the settlement, as have some Farmers executives.
Consumer Groups Unhappy
Many consumer groups claim that the current settlement is just as unfair to customers as one that was denied in 2003. Alex Winslow of Texas Watch, a group that deals with consumer insurance issues, says that the $117.5 million is inadequate because consumers have spent ten years attempting to resolve the issue, and that the settlement should include interest. The insurance company meanwhile claims that they were ready to settle the issue in 2003, and it was not their actions that caused the delay.
Less Comprehensive Policies
According to court documents, after the mold crisis, policyholders received less-comprehensive policies, but Farmers failed to reduce premiums to match the lost coverage. In addition, some customers did not receive discounts they were entitled to receive, while others paid excessive premiums for all types of insurance when Farmers used inaccurate credit reports to determine risk. A judge is expected to review the settlement in January and, if approved, approximately a half million Farmers customers could receive refunds or credits.
When the actions of an insurance company lead customers to pay unfair premium costs or reduces coverage illegally, a lawsuit may be in order. Contact Dallas-Fort Worth lawyers at Frenkel & Frenkel to schedule a free initial consultation regarding the actions of an insurance company that appears to be illegal or unethical.