Farmers Insurance agreed to pay $4.3 million to settle an Ohio lawsuit charging the company with discrimination against homeowners in minority neighborhoods in issuing homeowners insurance policies. With the settlement, California-based Farmers, the fourth largest home and auto insurer in the U.S., joins a handful of major home insurers who have resolved lawsuits in recent years over a practice known as “redlining,” in which minority homeowners are treated differently from those in white neighborhoods.
According to the Associated Press, under the terms of the settlement, Farmers will spend $3 million for grants and low-interest loans to develop, build and repair owner-occupied homes throughout the state. It will also pay a total of $1.3 million to the Ohio Civil Rights Commission, the Toledo Fair Housing Center and Housing Advocates of Cleveland.
Then Columbus Dispatch reported that the lawsuit, filed in 1999 in Lucas County, stemmed from complaints lodged in 1995 by two black women in the Toledo area who said Farmers wouldn’t sell them replacement insurance policies for their homes because the homes were built before 1950. The policies pay for the replacement of a home if it is destroyed.
The lawsuit was filed by the Toledo Fair Housing Center after the fair housing group sent 20 pairs of people to seek homeowners insurance from the company. The pairs consisted of one black person and one white person. The group reported that in more than 50 percent of the cases, black people were discouraged from seeking insurance while whites people were quoted a premium.
In settling the case, Farmers admitted no wrongdoing in the settlement, but the company was instructed to increase its marketing and advertising in minority communities across Ohio. The settlement was announced by Ohio Attorney General Betty Montgomery and the Ohio Civil Rights Commission.