Farmers Insurance broke the law by failing to disclose a $5 service charge
Court: Farmers Insurance broke law, can keep money
The Associated Press 12:58 p.m. December 11, 2008
SANTA ANA, Calif. — 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 Tuesday 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.