Minnesota Fines Farmers Insurance Exchange for Auto Coverage Overcharges

Minnesota Commerce Commissioner Mike Rothman has ordered an insurance company to refund more than $300,000 to Minnesota drivers who were charged higher auto insurance rates solely because they were renters rather than homeowners.

According to the Minnesota Commerce Department Insurance Division, Farmers Insurance Exchange must pay a $75,000 penalty and refund $315,000 to more than 1,600 Minnesota drivers after an investigation found the company was illegally discriminating against renters.

“You should not be forced to buy a house in order to get a fair price on your auto insurance,” Rothman said in a press announcement. “It is not only unfair, but in Minnesota it is also illegal for an insurance company to charge more or discriminate against drivers simply because they happen to rent their homes.”

Minnesota law specifically prohibits companies from setting auto insurance rates or benefits, or denying coverage, based on a driver’s status as a residential tenant.

Farmers Insurance Exchange is part of Farmers Insurance Group.

The Commerce Department said a market conduct examination of Farmers Insurance Exchange’s pricing practices discovered that the company was using a driver’s status as a residential tenant in offering or establishing its rates and discounts for auto insurance.

The company subsequently identified 1,620 Minnesota policyholders who were affected by this discriminatory pricing practice and agreed to issue refunds and credits with interest to these policyholders, totaling $315,317.

In addition to the consumer refunds and $75,000 penalty, the company must stop charging higher rates to renters. The company has also agreed to end discriminatory discounts that favored policyholders who have both homeowners and auto coverage over policyholders who have both renters and auto coverage.