Texas Ag, Farmers Make a Deal:

According to Texas Attorney General Greg Abbott, the state reached a settlement with Farmers Insurance Group that requires the company to refund an estimated $2.4 million to about 13,000 Texas motorists who may have paid more for vehicle repairs than was required under their policies. The agreement is unrelated to a proposed $117.5 million settlement with the state involving allegations the company deceived homeowners and misused credit scoring data. The AG’s office said the unlawful practice known as “betterment” involves supposedly increasing the value of a policyholder’s vehicle by paying for repairs with better or newer parts. The state’s top attorney noted that companies such as Farmers have routinely reduced the amount to be paid to the motorist for repairs by an amount believed to equal the improved value of the vehicle because upgraded parts were installed, such as new rather than rebuilt transmissions. Under the settlement, Farmers will refrain from deducting for betterment on its policyholders’ claims. The company agreed to refund the amount charged for betterment, plus interest, to policyholders who had an auto repair claim paid from Feb. 14, 1996, to the present. Farmers will mail checks directly to policyholders who had electronic estimates that indicated the company made these deductions for betterment. For those policyholders whose deductions cannot be identified though electronic estimates, Farmers will mail notices requesting that eligible persons make a written claim. Farmers will review the written claim file and send a refund check if the file indicates the company deducted for betterment. Farmers agreed that this settlement will not affect its insurance rates. It will also pay $175,000 in attorneys’ fees and other expenses to the AG’s office.