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Farmers Group Inc. seeks dismissal of insurance policy suit

LEGAL NEWSLINE

Sunday, December 22, 2024

Farmers Group Inc. seeks dismissal of insurance policy suit

Insurance 11

AUSTIN, Texas (Legal Newsline) – The defendant in a class action lawsuit over automobile insurance policies has filed a motion to dismiss in Texas federal court.

The motion to dismiss was filed April 3 in U.S. District Court for the Western District of Texas.

Plaintiffs Charles Grigson and Robert Vale filed a case against Farmer’s Group Inc. in February, claiming the company violated the Texas Insurance code’s unfair discrimination statute by offering less-expensive insurance policies to new customers. They also accused the company of not informing current customers about the new, less-expensive policy.

Past members held Farmer’s Auto 2.0 (FA2) policies that were phased out when Farmer’s Smart Auto Plan policies were developed. Thus the company stopped offering Farmer’s Auto 2.0 policies. 

The lawsuit claims that the policies are basically the same but the Farmer’s Auto 2.0 policy costs more.

However, the company has requested that the court dismiss the case with prejudice. 

It also stated that because the policy rates were submitted and approved by the Texas Department of Insurance, the case is baseless. According to the defense, the commission of the department has a responsibility to go over rates and ensure that they are fair. 

It also pointed out in its motion that there is a grievance process with the department that individuals are able to access if they are concerned about the rate.

Farmer's Group also stated the statute “only applies to discrimination without actuarial basis, in the amount of premium fees, or rates charged policyholders under a particular contract of insurance. It is focused on the fair and actuarially sound allocation of risk between policyholders with the same insurance contract.”

In addition, the motion claims that insurance policies are complex, which is why the law only considers discrimination between those holding the same policy.

“A seemingly minor change in coverage can have a large impact on potential loss payments and thus the rate paid," the defendant stated in the motion to dismiss.

Farmer’s Group Inc. is represented by Norton Rose Fulbright US LLP in Austin and Los Angeles.

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