A California appeals court says Farmers Insurance broke the law by failing to disclose a $5 service charge — but the company won’t have to pay back more than $115 million it collected.
The 4th District Court of Appeal in Santa Ana ruled that Farmers did violate a state code by failing to disclose the $5 it adds to monthly premiums to cover billing costs. The fee isn’t charged to customers who pay the premium in a lump sum.
A class-action lawsuit accused Farmers of unfair competition and a lower court in San Diego ordered it to repay policyholders about $115.6 million.
But the appellate court threw out the award, saying the plaintiff lacked standing to sue because he didn’t show he would have rejected the policy because of the fee.
Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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