State Farm Issues $13.3M in Refunds to California Policyholders

California Insurance Commissioner Dave Jones announced today that State Farm has issued refunds totaling $13.3 million for overcharged premiums to 241,356 California consumers in compliance with his rate reduction order after the carrier lost two court battles.

The refunds are from an order by Jones that State Farm reduce its homeowners and renters insurance rates by 7 percent overall. Jones issued the order, which went into effect on Dec. 8, 2016, after a public hearing and found that State Farm’s rates were excessive.

State Farm sued Jones and asked the court for a stay while the carrier challenged the order in court proceedings. The court denied State Farm’s request to hold off reducing its rates, and ruled that the rate reduction order should go into effect immediately

At one point, the California Department of Insurance filed a notice of noncompliance threatening an enforcement action, and State Farm again asked the court to intervene and block the notice of noncompliance. The court again rejected State Farm’s request, so State Farm began complying with the rate reduction order, including issuing refunds with interest to policyholders overcharged since Dec. 8.

A State Farm spokesman issued the following response when contacted for a comment:

“As a result of pending litigation with the California Department of Insurance, State Farm General Insurance Co. has agreed to issue refunds, with interest, for policies issued or renewed between Dec. 8, 2016 and Feb. 13, 2017. State Farm General understands these are complicated legal issues that will take time. We appreciate our customers’ patience as we work to resolve the matter. We will continue to comply with the orders of the Court.”