Two Texas men have filed a class action lawsuit on behalf of themselves and others similarly situated against Farmers Insurance, alleging that the company has violated the Texas Insurance Code by offering lower prices for auto insurance to new customers.
The suit was filed on Feb. 8, 2017, in the U.S. District Court for the Western District of Texas against Farmers Group, Inc. The plaintiffs claim that Farmers Insurance actively hid its practice of offering lower rates to new customers from existing policyholders.
According to the suit, the plaintiffs contend they suffered monetary damages because they were required to pay a higher premium rate for their existing policies than new customers paid for new policies. In addition, the plaintiffs claim that Farmers Insurance discriminated against them and other existing policyholders by not telling them about the lower rate the company offered new customers.
The lawsuit alleges that Farmers is in violation of Texas Insurance Code § 544.052, which states:
“A person may not in any manner engage in unfair discrimination or permit unfair discrimination between individuals of the same class and of essentially the same hazard, including unfair discrimination in: (1) the amount of premium, policy fees, or rates charged for a policy or contract of insurance; (2) the benefits payable under a policy or contract of insurance; or (3) any of the terms or conditions of a policy or contract of insurance.”
The suit claims that in order to reverse its declining business and market share in Texas in early 2016, Farmers introduced a new auto insurance policy called the Farmers Smart Plan Auto (“FSPA”) that offered the same coverage as its existing Farmers Auto 2.0 and 2.5 (“FA2”) polices at a lower cost.
Then, according to the suit, Farmers “took several aggressive, deliberate, and highly deceptive steps to ensure that only new Texas customers would be made aware of FSPA and receive FSPA policies, and that FSPA would be hidden from existing FA2 policyholders and all or nearly all existing FA2 policyholders would continue to receive FA2 policies with generally higher rates.”
In addition, the suit claims that just prior to introducing the FSPA plan in Texas, Farmers raised premium rates for FA2 policies. The rate difference between FSPA and FA2 policies can be 20-40% higher, according to the complaint.
The suit seeks class action status for all Texas Farmers Insurance policyholders, which it estimates to be one million or more. Plaintiffs seek injunctive relief, damages, restitution, statutory penalties of up to $25,000 per class member, all legal fees and interest, and another other relief the court deems just.
If you or a loved one has suffered an injury or injustice, the experienced personal injury legal team at Roberts & Roberts is here to help with compassionate, aggressive representation. Please call 800-248-6000 or contact us for a free consultation.