Farmers Insurance Exchange announced it will vigorously oppose a decision by a San Diego Superior Court regarding premium payment plans offered to its customers in California and Nevada.
“On behalf of our customers in California and Nevada who rely on Farmers to provide their insurance coverage, Farmers will appeal today’s unsupportable court decision,” said Jeff Beyer, senior vice president and chief communications officer. “This legal ruling erroneously interprets fees for our billing options as insurance premium payments, which they are not. There was no dispute over the fees charged — the ruling said we had the right information on the wrong piece of paper. We cannot agree with this decision,” Beyer added.
The lawsuit did not dispute that a fee can be charged for the billing options, and there was no dispute over the amount of fees charged, according to Farmers. The only dispute, the company said, was as to the location of where the fee is shown. In the 44 years that a monthly payment billing option has been offered to Farmers customers in California and Nevada, the company has not shown the billing service fee on the policy declarations page because it has never been considered part of the premium.
In a recent nationwide survey, the majority of insurance consumers polled said they were aware that a fee would be charged for the convenience of paying on a monthly basis. Farmers also found that 43 percent of those polled would not do business with an insurance company that did not offer a monthly payment option. The premium payment plan involved in this lawsuit has been offered since 1961.
Farmers was named a class action defendant in 2004 as part of a wave of lawsuits nationwide challenging insurance company premium payment options, disclosure and service fees for both life and property and casualty insurers. Other insurance companies are now receiving judgments for the same type of lawsuit, according to the company. Many of the lawsuits have become class action suits.
Premium payment services are advantageous from a cost standpoint compared to most premium finance plans, Farmers said. The payment plan fees are clearly and fully disclosed to the customer. The court ruling could deprive the customer of the ability to consolidate all premium payment fees in one clear location.
“We dispute every aspect of today’s ruling,” Beyer said. “We will aggressively challenge this erroneous legal decision.”
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