Farmers Insurance Sucks! Boycott Farmers Insurance!

Is Farmers Insurance Giving Large Campaign Donations for Favorable Rulings in Lawsuits?

2009-04-10T07:01:00.000-07:00

In the Texas Supreme Court race, Rove helped Owen amass a war chest of over $926,000 in campaign contributions from Big Business and the ranks of the Texas GOP. Owen then obliged some of her biggest donors by ruling favorably on their lawsuits with amazing consistency. The watchdog group Texans For Public Justice reported "more than $500,000 (37 percent) of the $1.4 million that Owen raised for her two Supreme Court campaigns came from lawyers and litigants who had cases in her courtroom... Owen's 11 biggest litigant-donors (including Enron Corp., Farmers Insurance and Dow Chemical) appeared in her courtroom 26 times. While these big docket donors prevailed an enviable 77 percent of the time before the court as a whole, Owen was even kinder - favoring them 85 percent of the time."

Full Article: huffingtonpost.com

Farmers Insurance customers are STILL waiting for their money

2009-03-09T07:04:00.000-07:00

$117 million in Farmers refunds for Texas policyholders has been in limbo 7 years

By TERRENCE STUTZ / The Dallas Morning News
tstutz@dallasnews.com

AUSTIN – It's becoming known as the case of the missing insurance refunds.

Back in the fall of 2002, Farmers Insurance and state regulators agreed to resolve allegations that the company had overcharged customers with a $117 million settlement that included refunds and lower rates for nearly half a million policyholders.

Shortly after the agreement was announced, it was challenged by a group of Farmers policyholders, who insisted it was a bad deal for them. Although a state judge upheld the settlement, his decision was overturned by an appeals court and then taken to the Texas Supreme Court – which sent the legal dispute back down for further deliberations.

And so the case sits unresolved – going on seven years – and Farmers customers are still waiting for their money.

"Farmers has worked closely with the Texas Department of Insurance and remained ready to implement the agreed-on settlement for several years," said Michelle Levy, a spokeswoman for Farmers in Texas. "We're ready to take action, but there's nothing we can do until the courts have decided this."

'No longer viable'

Joe Longley, attorney for the Farmers policyholders, said the amount is a slap at policyholders.

"The settlement amount was a fraction of what Farmers took from their customers in Texas and what they are continuing to take. Refunds should be as much as 10 times" the $117 million settlement, he insisted.

The case was sent back to the 3rd Texas Court of Appeals in Austin in April 2007 and has been sitting there since.

Longley said he believes the case should be sent back to trial court because all the deadlines and conditions of the original settlement have long passed.

For a lot of reasons, he said, the settlement is "no longer viable" and must be redone.

The attorney general's office, meanwhile, is trying to have the settlement certified as a class action representing all Farmers customers in the state. Such a certification could invalidate other claims against the company.

Mold beginnings

The agreement came after the company had threatened to pull out of the Texas home insurance market because of massive mold losses. Company officials also were stinging from repeated attacks by Gov. Rick Perry, who made Farmers his favorite target in his 2002 race for governor.

Perry's appointed insurance commissioner at the time, Jose Montemayor, hammered out the agreement with Farmers, apparently without consulting the governor, who was unhappy with the terms.

In the years since, Farmers has stayed on the good side of the insurance department, even winning approval from current Commissioner Mike Geeslin last month to increase rates by double-digit percentages for hundreds of thousands of customers.

Farmers is now the third-largest property insurer in Texas behind State Farm and Allstate, providing coverage to about 714,000 homeowners.

Alex Winslow of Texas Watch, a consumer group active in insurance issues, said the stalled Farmers settlement is an example of the flawed system of regulation in Texas.

"Due process is a right for everybody, including insurance companies. But seven years is too long," Winslow said.

He compared the Farmers settlement to the "sweet deal" that Allstate received from the state last year when it settled allegations of overcharges in homeowners insurance. Allstate agreed to refund $51.6 million to its customers but was let off the hook for another $19.2 million by Geeslin, who defended the settlement as a "positive step" for ratepayers and the Texas insurance market.

Texas Watch is backing legislation filed by Democrats in the Senate and House that would require prior state approval of insurance rate increases. Currently, companies can raise rates once they notify the insurance department, which has the right to review those rates and decide whether they are justified.

Industry's stance

The insurance industry opposes prior government approval of rate increases.

"Instead of chasing the short-sighted goal of artificial price fixing, we should stick with the goal of creating a well-regulated competitive marketplace that can handle our state's tough climate efficiently and still attract companies and capital," said Beaman Floyd of the Texas Coalition for Affordable Insurance Solutions, an industry group.

Levy of Farmers emphasized that her company agreed to pay refunds to its customers and has been blocked from doing so by the class action intervention filed by Longley, an Austin attorney.

"They have left Farmers unable to implement the settlement, including retrospectively reducing rates and adjusting certain rating factors," she said.

Longley contends that the company's rates are still too high, which Levy disputed.

Longley also has a separate class action case against Farmers pending in federal court in Oklahoma City. That suit centers on management fees charged by Farmers that are reflected in premiums paid by customers in Texas and several other states.

The state's other long-running dispute over insurance rates, involving State Farm, is scheduled to go before the insurance commissioner at a March 30 hearing.

State Farm was accused by the state of overcharging customers and ordered to lower rates by 12 percent in the fall of 2003. The case has been in the courts since then, and State Farm has won some key victories. But the company is on the hook for more than $650 million in overcharges and penalty interest dating back nearly six years.

Source: dallasnews.com

Farmers Insurance seeks 27.5% homeowners’ rate increase

2009-03-02T07:02:00.000-08:00

Property insurance increases expected

By TED GRIGGS
Advocate business writer

Louisiana homeowners and businesses will see property insurance rates rise more this year than they have since 2006, in large part because of the financial meltdown, Insurance Commissioner Jim Donelon said.

“I do not anticipate that it will result in double-digit increases,” Donelon said.

In 2008, Louisiana homeowners’ rates rose an average of less than 1 percent, Donelon said. In 2007, the rates were up by just over 3 percent.

This year the rates will rise somewhere between those low numbers and 10 percent, Donelon said. The same holds true for commercial property insurance and for automotive coverage.

Insurance companies’ ability to write coverage is affected by the amount of capital available, Donelon said. With investors dumping insurance sector stocks, those companies can’t write as much coverage.

Meanwhile, insurance companies are also seeing their investment portfolios take a beating, Donelon said. This also reduces the amount of coverage they can write.

According to the Insurance Information Institute, an industry-funded group in New York, investments are the principal source of declining profitability among insurers. During the first three quarters of 2008, the insurance industry’s investment gain was $28.3 billion. The fourth-quarter figures are not yet available, but even if the industry’s investments remained at that level, when stocks and interest rates continued to fall, the total would still be the lowest in 15 years.

Robert Hartwig, president of the institute, said bonds represent roughly two-thirds of insurance companies’ investments, with stocks accounting for 20 percent or less.

Low interest rates and returns on investments, in the United States and internationally, will ultimately affect the price of insurance, Hartwig said. That is because a certain part of the losses that insurers pay have always been financed by investment returns.

The effect varies by insurer, Hartwig said, “but there was no insurer that was not impacted by what happened on Wall Street last year.”

Still, the major factor influencing property insurance costs in Louisiana remains the threat of a major hurricane, Hartwig said. An active season is expected in 2009, and reinsurers are raising their rates to reflect that.

Donelon said that with less coverage available, the law of supply and demand kicks in and prices rise.

Already, State Farm Fire & Casualty Co., the largest insurer in Louisiana, has asked to increase homeowners’ rates an average of 14 percent statewide. Farmers Insurance Exchange, the sixth-largest firm in the state, is seeking a 27.5 percent increase in homeowners’ rates and the institution of a 5 percent hurricane deductible. Louisiana Farm Bureau, the fifth-largest company, is seeking a 10.2 percent increase.

The Insurance Department is reviewing those requests, but Donelon said his preliminary review is that neither State Farm nor Farmers will receive a double-digit increase.

Farm Bureau’s request has only recently been filed.

However, Brooke Cluse, a spokeswoman for State Farm, said the rate request is not directly related to the state of the economy or financial markets.

“We have had a tremendous amount of weather-related losses in the state over the past several years, and while many insurers have left the state, State Farm is here and committed to our policyholders in Louisiana. We have demonstrated our commitment by helping our customers recover from unexpected loss and they can expect nothing less in the future.”

Farmers Insurance officials could not be reached for comment Friday.

Source 2theadvocate.com

Farmers Insurance Company sued again

2009-03-02T07:00:00.000-08:00

Lawsuits keep coming in Burlingame landslide
Shasta Kearns Moore / The Southwest Community Connection

HILLSDALE — Two more lawsuits have been filed in Multnomah County Court by the owners of the second home destroyed in the Burlingame Place landslide. The complaints totaling more than $1.7 million name Dave and Kathei Hendrickson, Farmers Insurance Company and the family’s insurance agent, Lynette Sanders.

Dr. Yuan Chou and his wife, Siukee Tong, barely escaped their home in the early morning on Oct. 8 when the house owned by the Hendricksons slid down the hillside and shoved their house off its foundation.

Both houses were destroyed — along with five other homes that were damaged — and the resulting debris has since been removed from the site.

Chou and Tong’s attorney, Jim Martin, said his clients are suing Farmers’ Insurance Company for not covering the damage to the home. Farmers’ Insurance has refused to pay, saying the policy does not cover earth movement.

But Martin argues that the damage to the home was not directly caused by earth movement.

“It is our position that the Hendricksons’ house is a flying object that landed on my client’s house, which is covered in the policy,” he said, adding that photographs show no mud on the Chou home. “So my client’s house was not damaged by land movement, it was damaged by a house falling on it.”

The family is also suing the Hendricksons for trespass, private nuisance and strict liability.

The complaint lists several remodels and landscaping projects that the Hendricksons undertook before the slide and argues that their negligence in performing these projects contributed to the landslide.

As stated in the complaint: “Upon information and belief, homes such as the Defendants’ home, do not slide down hillsides that has been there for 80 years without Defendants’ negligence in the care of their home, remodeling of their home and most importantly their landscaping as well as water management (sic).”

Farmers’ Insurance, who is also the Hendricksons’ insurer, has agreed to defend the them against this suit, according to their private attorney.

Burlingame Place remains closed
The section of Burlingame Place where Dave and Kathei Hendrickson’s home once stood will be closed until the shoulder can be rebuilt, say city officials.

Now a steep drop off to Terwilliger Boulevard, Bureau of Environmental Services spokesman Ross Caron said it would be too dangerous to open the street and risk damage to the road.

City engineer Doug Morgan said tests have shown the slope to be stable so far, but that it would be too risky to allow traffic on that section of road without the lateral support of a shoulder.

“Because of the steepness of the scarp, it’s not considered safe to reopen Burlingame,” Morgan said.

It is the responsibility of the homeowners to rebuild the shoulder, which could cost anywhere from $100,000 to $300,000, Caron estimated.

Caron said officials can eventually use city code to force the property owners to rebuild the hillside, but because the road closure is no longer impacting a major thoroughfare, they can afford to give the Hendricksons more time.

“It’s a delicate balancing act between being patient and compassionate and moving the process along quickly,” Caron said, adding city officials are trying to “treat them as they would like to be treated.”

Source swcommconnection.com

Farmers Insurance sued over Hurricane Ike claim

2009-02-18T07:19:00.000-08:00

A Jefferson County man has filed suit against Farmers Insurance Exchange, alleging he was not paid money to which he was entitled after Hurricane Ike destroyed sections of his home.

When Pete Zavala's property at 9336 FM 365 in Beaumont sustained dwelling and contents damages on Sept. 13 during Hurricane Ike, he submitted a claim to Farmers, which had insured his property, according to the complaint filed Feb. 10 in Jefferson County District Court.

Zavala requested Farmers cover the cost of repairs, the suit states.

However, Farmers improperly adjusted Zavala's claim for the repairs of his property, even though the policy provided coverage for losses, he claims.

Farmers told Zavala it would not pay the full proceeds of the policy, although demand was made for it, which constitutes a breach of the insurance contract, the suit states.

"Defendant misrepresented to Plaintiff that the damage to the property was not in excess to the amount paid, even though the damage was caused by a covered occurrence," the suit states.

Farmers also failed to make an attempt to settle Zavala's claim in a fair manner, a violation of the Texas Insurance Code, unfair settlement practices, he claims.

The company failed to explain the reason for its offer of an inadequate settlement, another violation of the Texas Insurance Code, according to the complaint.

Farmers failed to affirm or deny coverage of the claim within a reasonable time frame, the suit states.

It refused to fully compensate Zavala, even though it did not conduct a reasonable investigation, which constitutes another violation of the Texas Unfair Competition and Unfair Practices Act, he alleges.

Farmers breached its contract with Zavala by refusing to pay the policy, according to the suit.

Zavala is seeking three times his actual damages, plus 18 percent post-judgment interest per annum and exemplary damages.

Jason M. Byrd of Snider and Byrd in Beaumont will be representing him.

The case has been assigned to Judge Milton Shuffield, 136th District Court.

Case No. D183-249
Source: setexasrecord.com

Texas Farmers Insurance Co. is suing the state to block the release of documents

2009-02-16T12:32:00.000-08:00

By RYAN McNEILL / The Dallas Morning News

Texas Farmers Insurance Co. is suing the state to block the release of documents to The Dallas Morning News that could give insight into how it charges consumers for its homeowners policies.

The lawsuit, filed Feb. 3 in Travis County, followed a decision by the state attorney general's office ordering the Texas Department of Insurance to release the documents. The insurance department was also ordered to release similar documents filed by Allstate Fire and Casualty Co., which did not sue to block the action.

The News requested rate filings and supporting documentation for the three major homeowners insurance companies in Texas – State Farm Lloyds Co., Allstate and Farmers. The insurance department released only parts of Allstate's and Farmers' filings that had not been marked "confidential" by the companies; it released all of State Farm's filings, none of which had been marked "confidential."

At issue is how much insurance companies can use trade-secrets exemptions in Texas' open-records laws to keep information from the public. The requested documents show mathematical formulas and other information the companies use as a model to determine what to charge customers.

Farmers argued that release of the documents, provided to the insurance department as agency officials sought to determine whether insurance rates were proper, would cause irreparable financial harm by making "valuable trade secrets" available to competitors.

"Essentially what we're being asked to do is like the University of Texas having to share its football playbook with Texas A&M," said Michelle Levy, a Farmers spokeswoman.

Pushing transparency?

Consumer advocates worry that transparency is at stake.

"What are they hiding here?" asked Alex Winslow, executive director of the consumer advocacy group Texas Watch. "What is it they don't want the public to know about how they're setting their rates?"

The Texas Department of Insurance initially refused to release any part of Allstate and Farmers filings that were marked "confidential" without a ruling from the Texas attorney general's office.

Winslow said his consumer watchdog group has found that "insurance companies will stamp everything they file with the Department of Insurance as proprietary and confidential, even if it's explicit in the statute as being subject to open records."

On Jan. 15, the attorney general ordered the records' release, ruling that the Legislature intended for the public to have access to the documents because they were part of the insurance department's review of insurance premiums under the state's file-and-use system.

State insurance officials insist that they release what is allowable, while upholding the law.

"When it comes to transparency, we push as much information out there as we possibly can," said Texas Insurance Commissioner Mike Geeslin.

But the executive director of the Center for Economic Justice, an Austin-based advocacy group, disagreed.

"Insurers are hiding what they're doing, and regulators are being complicit," said Birny Birnbaum.
Source: dallasnews.com

Farmers Insurance rate hike to hit many Texas homeowners

2009-02-14T22:14:00.000-08:00

By TERRENCE STUTZ / The Dallas Morning News
tstutz@dallasnews.com

AUSTIN – Hundreds of thousands of homeowners in North Texas and across the state will see their insurance rates increase by double digits beginning Monday after state regulators decided not to object to the rate hikes by Farmers Insurance.

The higher rates affect policyholders for two of the company's largest subsidiaries – Farmers Insurance Exchange and Fire Insurance Exchange – which will boost their premiums nearly 10 percent and 12.6 percent respectively, starting with policies renewed on Monday.

Farmers is the third-largest home insurer in Texas.

"We are not planning to take any action on it, so the effective date stands," Jerry Hagins of the Texas Department of Insurance said Friday. The agency reviewed the proposal after it was filed late last year and could have objected if officials had found the increase unjustified.

A spokeswoman for Farmers said the increase for customers of the two subsidiaries is across the board with no variations by region of the state.

Michelle Levy of Farmers, who cited higher costs for labor and materials as one reason for the increases, noted that the rate proposals were being developed even before Hurricanes Ike and Dolly struck the Texas coast last year.

"It was part of our annual review of rates in 2008," she said.

Rates for Farmers' other home insurance subsidiary in the state – Texas Farmers Insurance – went up 7.9 percent last year, an increase that was reflected in annual premium notices beginning in May. Farmers provides coverage for about 714,000 Texas homeowners.

Consumer groups on Friday criticized the insurance department for allowing the increases to go through.

"These kinds of double-digit rate hikes should provide the Legislature with the evidence they need to move forward with real insurance reforms this year," said Alex Winslow of Texas Watch.

"Enough is enough. How many of these rates hikes do we have to have before lawmakers and the insurance commissioner recognize that insurance companies are taking advantage of the system?" he asked.

Regarding the massive losses that companies suffered in 2008 because of the hurricanes, Winslow said, "Certainly we want rates to be sufficient, but given the overcharges that Farmers and other companies have imposed on customers for years, I have no doubt the insurance industry in our state has ample resources to protect themselves against weather-related losses."

Source: dallasnews.com

Farmers Insurance is one of the 10 Worst Insurance Companies for Consumers

2009-02-14T13:35:00.000-08:00

The American Association for Justice has recently released a report entitled The Ten Worst Insurance Companies in America. You can read it here (pdf). The Alabama Association for Justice has prepared a statement on the report, which appears below:

10 Worst Insurance Companies for Consumers Ranked; No. 1, 3, 4 and 7 Sell Policies in AL

Insurance Industry Employs "Deny, Delay, Defend" Strategy, Puts Profits Over Policyholders

MONTGOMERY - In recent years, Alabama homeowners have seen sharp increases in their insurance premiums. A new study put out by the American Association for Justice ranks the 10 worst insurance companies in the U.S. for consumers and explains the overall rise in premium costs to an industry-wide strategy of denying claims, delaying payments and defending those positions as long as possible in hopes that weary claimants will settle for less than their claim is worth.

"Nationally, we've seen insurance companies continue to put profits over the best interest of their policyholders," Gibson Vance, president of the Alabama Association for Justice (ALAJ), formerly the Alabama Trial Lawyers Association, said, adding that "in Alabama it's no different."

In Alabama, State Farm (#4 on the 10 Worst Insurance Companies List) is the leading insurer of property and casualty insurance, followed by Allstate, AIG and Farmers (#'s 1, 3 and 7 on the 10 Worst Insurance Companies List). Alabamians pay the ninth-highest average homeowners premiums in the nation, which insurers say is because of hurricane risk, but interestingly only 12 percent of the state is coastal. In addition, property and casualty insurers took in $6.6 billion in premiums from Alabama policyholders in 2006 but only paid out $3.5 billion in losses.

Thousands of court documents, materials uncovered from litigation and discovery, testimony, complaints filed with state insurance departments, SEC and FBI records, and news accounts were reviewed to compile the rankings and statistics of the study. Financial documents also revealed extravagant profits and executive compensation while policyholders' claims were routinely delayed and denied. Over the last 10 years, the property / casualty and life / health insurance industries have each enjoyed annual profits exceeding $30 billion. The insurance industry takes in over $1 trillion in premiums every year. It has $3.8 trillion in assets, more than the GDPs of all but two countries. The CEOs of the top 10 property / casualty firms earned an average of $8.9 million in 2007. The CEOs of the top 10 life / health insurance earned an average of $9.1 million. The median insurance CEO's cash compensation is $1.6 million per year, leading all industries.

"The 10 worst insurance companies that made the list did so because of their shameful treatment of policyholders. As the study shows, Allstate's Your in Good Hands' motto only applies if you don't make a claim," Vance said.

10 Worst Insurance Companies for Consumers

1. Allstate (NYSE: ALL) set the standard for insurance company greed and placing profits over policyholders. Allstate contracted with consulting giant McKinsey & Co. in the mid-1990s to systematically force consumers to accept lowball claims or face its "boxing gloves," an aggressive strategy designed to deny claims at any cost. One Allstate employee reported that supervisors told agents to lie and blame fires on arson, and in turn, were rewarded with portable fridges.

2. Unum (NYSE: UNM) - Unum's actions are even more shameful considering the type of insurance it sells: disability. Unum's behavior was epitomized when it denied the claim of a woman with multiple sclerosis for three years, stating her conditions were "self-reported," contrary to doctors' evaluations. In 2005, Unum agreed to a settlement with insurance commissioners from 48 states over their practices.

3. AIG (NYSE: AIG) - The world's biggest insurer, AIG's slogan was "we know money." AIG, described by commentators as "the new Enron," has engaged in massive corporate fraud and claims abuses. In 2006, the company paid $1.6 billion to settle a host of charges.

4. State Farm - State Farm is notorious for its deny and delay tactics, and like Allstate, hired McKinsey consultants. State Farm's true motives became apparent during Hurricane Katrina; for example, it employed multiple engineering firms until they could deny the claims of the Nguyen family of Mississippi. In April 2007, State Farm agreed to re-evaluate more than 3,000 Hurricane Katrina claims.

5. Conseco (NYSE: CNO) - Conseco sells long-term care policies, typically to the elderly. Amongst its egregious behavior, the insurer "made it so hard to make a claim that people either died or gave up," said a former Conseco-subsidiary agent. Former Conseco executives were fined when they admitted to filing misleading financial statements with regulators.

6. WellPoint (NYSE: WLP) - Health insurer WellPoint has a long history of putting profits ahead of policyholders. For instance, California fined a WellPoint subsidiary in March 2007 after an investigation revealed that the insurer routinely canceled policies of pregnant women and chronically ill patients.

7. Farmers - Swiss-owned Farmers Insurance Group consistently ranks at or near the bottom of homeowner satisfaction surveys, and for good reason. For example, Farmers had an incentive program called "Quest for Gold" that offered pizza parties to its adjusters that met low claims payments goals. Like Allstate, it also hired the McKinsey consultants.

8. UnitedHealth (NYSE: UNH) - The SEC opened an investigation into former UnitedHealth CEO William McGuire for stock backdating, which ultimately led to his ouster in 2006 and returning $620 million in stock gains and retirement compensation. Physicians have also reported that their reimbursements are so low and delayed by the company that patient health is being compromised.

9. Torchmark (NYSE: TMK) - According to Hoover's In-Depth Company Records, Torchmark's very origins were little more than a scam devised to enrich its founder, Frank Samford. Torchmark has preyed on low-income Southern residents and charged minority policyholders more than whites on burial policies.

10. Liberty Mutual - Like Allstate and State Farm, Liberty Mutual hired consulting giant McKinsey to adopt aggressive tactics. Liberty's tactics were highlighted when a New York couple's insurance was "nonrenewed" by Liberty, even though they lived 12 miles from the coast and never experienced weather-related flooding.

To see how consumers can hold the insurance industry accountable and view a full copy of the study, visit www.justice.org
Source: whnt.com

Farmers Mutual Insurance Company Sued for Claim Denial

2009-02-13T07:33:00.000-08:00

Montgomery County residents file hurricane insurance suit in Jefferson County
By Kelly Holleran

Two residents of The Woodlands have filed suit against Ranchers and Farmers Mutual Insurance Company and Southeast Surplus Underwriters General Agency, alleging they were not paid money to which they were entitled after Hurricane Ike destroyed sections of their home.

When Michelle Weishiemer's and David Aguilar's property at 19 Shimmer Pond Place in The Woodlands sustained roof and water damages on Sept. 13 during Hurricane Ike, they submitted a claim to Ranchers and Farmers, which had insured their property, according to the complaint filed Jan. 30 in Jefferson County District Court.

Weishiemer and Aguilar requested Ranchers and Farmers cover the cost of repairs, the suit states.

However, Ranchers and Farmers denied a portion of Weishiemer's and Aguilar's claim for the repairs of their property, even though the policy provided coverage for losses, she claims.

It denied the claim after assigning an adjuster from Southeast Surplus to adjust the claim, according to the complaint.

"Plaintiffs' claim(s) still remain unpaid and the Plaintiffs still have not been able to properly repair the Property," the suit states. "Plaintiffs cannot live in their house in its current condition. They have been forced to lease another house at their own expense because Defendants have not even properly paid Plaintiffs under their Loss of Use coverage under their policy."

Ranchers and Farmers told Reed it would not pay the full proceeds of the policy, although demand was made for it, which constitutes a breach of the insurance contract, the suit states.

"Defendants misrepresented to Plaintiffs that the damage to the Property was not covered under the Policy, even though the damage was caused by a covered occurrence," the suit states.

Ranchers and Farmers and Southeast Surplus also failed to make an attempt to settle Weishiemer's and Aguilar's claim in a fair manner, a violation of the Texas Insurance Code, unfair settlement practices, they claim.

The companies failed to explain the reason for their offer of an inadequate settlement, another violation of the Texas Insurance Code, according to the complaint.

Ranchers and Farmers and Southeast Surplus failed to affirm or deny coverage of the claim within a reasonable time frame, the suit states.

They refused to fully compensate Weishiemer and Aguilar, even though they did not conduct a reasonable investigation, which constitutes another violation of the Texas Unfair Competition and Unfair Practices Act, Weishiemer and Aguilar allege.

Ranchers and Farmers and Southeast Surplus breached their contract with Weishiemer and Aguilar by refusing to pay the policy, according to the complaint.

Ranchers and Farmers and Southeast Surplus violated the Deceptive Trade Practices Act by an unreasonable delay in the investigation, adjustment and resolution of the Weishiemer's and Aguilar's claim, by their failure to give Weishiemer and Aguilar the benefit of the doubt and by their failure to pay for the proper repair of Weishiemer's and Aguilar's home, the suit states.

Ranchers and Farmers and Southeast Surplus engaged in false, misleading and deceptive acts or practices in the business of insurance, according to the complaint.

The companies also engaged in unfair claims settlement practices, the suit states.

Weishiemer and Aguilar are seeking unspecified actual, consequential, treble, punitive and exemplary damages, plus attorney's fees, costs, pre- and post-judgment interest and other relief to which they may be entitled.

Jason D. Speights of Speights Law Firm in San Antonio will be representing them.

The case has been assigned to Judge Milton Shuffield, 136th District Court.

Case No. D183-165
Source: setexasrecord.com

Farmers Insurance, Claim Denied and Breach of Contract?

2009-01-29T09:52:00.000-08:00

The lawsuits keep rolling in over the Oct. 8 landslide in Southwest Portland that destroyed two homes and damaged another.

On Wednesday, Yuan Chou and his wife, Siukee Tong Chou, filed two suits: one against their insurance company for breach of contract and intentional infliction of emotional distress; and another for liability against David and Kathleen Hendrickson, the couple whose home slid down the hillside, crashing into the Chou's home.

The Hendricksons' 1930 home at 6438 S.W. Burlingame Place damaged one home as it ripped the Chou's home off its foundation. The Chous have been living in a rented apartment since narrowly escaping the sliding debris of earth, cars and building materials.

The Chous' suit against Farmers Insurance seeks payment of unspecified damages to their home, its contents and attorney's fees. Farmers issued them a letter last month saying their policy does not cover landslides.

The city of Portland has issued permits for cleanup and some slope stabilization. That work is being paid for by Farmers, which also insured the Hendrickson home. The cleanup falls under the couple's liability policy, but they also are suing Farmers for breach of contract after Farmers denied their property claim.

The city has not found a definitive reason why the home slid, and an exact cause may never be known because the slide erased the evidence. But a preliminary investigation led officials to believe that a leak in the Hendricksons' backyard sprinklers may have saturated the soil.

The homeowners installed a sprinkler system on the property in March 2005, according to city records. Last September, they installed a new back-flow device and shut-off valve. Water use at the property was unusually high just before the slide, officials have said, suggesting a leak or a malfunction. But it's unclear whether the sprinklers were overused or a pipe broke.

The Hendricksons' suit against Farmers cites "an accidental discharge of water" that may have caused the damage. Farmers hired a consultant who concluded, among other things, that the slide was triggered by slope instability "due to the presence of water" and that the water was not likely from rain or natural seepage.

Lawyers in the case expect that homeowners and their insurance companies and the Hendricksons' contractors and their insurance companies likely will come together later this year for settlement talks.

Source: oregonlive.com

Farmers New World Life Insurance and HIV

2009-01-29T07:00:00.000-08:00

The Spokane Spokesman-Review on Wednesday examined a case in Washington state in which an HIV-positive man was denied life insurance by Farmers New World Life Insurance. Some advocates had hoped that the discrimination case would "open doors" for people living with the virus who are denied life insurance, the Spokesman-Review reports, adding that those hopes were "dashed" by a ruling that said Gerald Hebert -- an employee with the state's Human Rights Commission who issued a complaint with the insurance commissioner's office in 2006 -- was not illegally discriminated against because of his HIV-positive status.

Although the issue of HIV/AIDS-related discrimination is not new, advocates said this case illustrates that the insurance industry fails to recognize the increased life expectancies of HIV-positive people because of advances in antiretroviral therapy. Sid Wolinsky of the San Francisco not-for-profit legal center Disability Rights Advocates said that the "problem" with insurance companies is that they "routinely use grossly outdated statistical material," rarely keep their own data and rely on manuals reinsurance companies provide. Wolinsky said, "That is not to say there is not an increased mortality or morbidity risk for somebody with HIV than for somebody without it. But the risk is such that it can be covered."

According to the Spokesman-Review, insurance companies can deny coverage to a person only if there is sound statistical data that show the person is too risky to insure. Documents show that the Washington state Insurance Commissioner's Office, which led the investigation, had difficulty obtaining such information from Farmers. The Spokesman-Review reports that a Swiss study of people living with HIV found that "successfully treated HIV-positive and hepatitis C-negative patients have a short-term mortality as low as or lower than that of patients with cancer who have been successfully treated -- a group that is able to obtain life insurance."

Marc Brenman -- former executive director of the state's Human Rights Commission -- said that there is reason to believe Farmers routinely violated a state law by denying insurance to people living with HIV. Brenman said that there is "an entire class of people who are not able to purchase life insurance at any price, and it is entirely and absolutely wrong." Farmers denies the claim and said that it applies underwriting grants fairly and consistently (Graman, Spokane Spokesman-Review, 1/28).

Farmers New World Life Insurance Co. denies policy because of HIV?

2009-01-28T07:00:00.000-08:00

Fallout goes on after insurer denies policy because of HIV

(Spokesman-Review, The (Spokane, WA) Via Acquire Media NewsEdge) Jan. 28--Disability rights advocates had hoped a Washington state discrimination case would open doors to thousands of people with HIV who are denied what many others take for granted -- life insurance.

But their hopes have been dashed by a behind-the-scenes ruling in Olympia that a Washington life insurance company did not illegally discriminate against a 49-year-old Kitsap County man when it denied him a policy because he is HIV-positive.

Fallout from the case has led, in part, to the recent dismissal of the state's human rights director and a lawsuit against the office of state Insurance Commissioner Mike Kreidler.

Insurance regulators initially appeared ready to sanction Farmers New World Life Insurance Co., state documents show, but later backed off. The Human Rights Commission launched its own investigation, triggering a political showdown, an allegation of collusion and an unfavorable state audit of the commission's involvement in the case.

"There is an entire class of people who are not able to purchase life insurance at any price, and it is entirely and absolutely wrong," said Marc Brenman, the former executive director of the Human Rights Commission who lost his job this month, partly as a result of his role in this discrimination case.

Citing a pending court case and an open investigation, the offices of the insurance commissioner and the Human Rights Commission declined requests for interviews.

Advocates say the issue of discrimination against people with HIV is nothing new, but the Farmers case illustrates the insurance industry's failure to recognize that anti-retroviral treatment has greatly increased life expectancies of those who have the virus that causes AIDS.

"The problem with insurance companies," said disability rights activist Sid Wolinsky, is "they routinely use grossly outdated statistical material." Furthermore, they rarely keep their own data, relying instead on manuals provided by reinsurance companies. "That is not to say there is not an increased mortality or morbidity risk for somebody with HIV than for somebody without it," said Wolinsky, of Disability Rights Advocates, a nonprofit legal center in San Francisco. "But the risk is such that it can be covered."

In Washington, the potential test case grew out of a 2006 coverage denial.

That October, Brenman's office brought to the attention of the insurance commissioner's office a complaint filed by Gerald Hebert, of Poulsbo, Wash., who had been denied life insurance by Farmers New World Life Insurance, a subsidiary of Farmers Group.

Brenman said there was reason to believe Farmers routinely denied insurance to people with HIV in violation of state law. Farmers has said that the company applied underwriting guidelines fairly and consistently and that the complaint was without merit.

Insurance Commissioner Mike Kreidler's office, instead of the Human Rights Commission, was asked to investigate the case to avoid the appearance of conflict of interest. At the time, Hebert, a gay rights advocate, was a member of the Human Rights Commission. He resigned in September 2008 after auditors concluded he had misused a state-issued credit card and rental cars.

By that time, though, the complaint over denied coverage already was under investigation.

From the beginning, the insurance commissioner's office had difficulty obtaining information from Farmers New World Life showing a statistical difference in the risk of insuring someone with HIV, documents show. An insurance company can only turn someone down for insurance if it has sound actuarial data to show that a person is too risky to insure.

However, in a Swiss study of people with HIV, researchers found that "successfully treated HIV-positive and hepatitis C-negative patients have a short-term mortality as low as or lower than that of patients with cancer who have been successfully treated -- a group that is able to obtain life insurance."

A December 2006 letter from Marcia Stickler, of the insurance commissioner's legal affairs division, to Brian Kreger, of Farmers, complained about the company's lack of response to repeated requests for the criteria used to refuse insurance to people with HIV.

Farmers "either has and uses such criteria or it does not," Stickler wrote. "It is clear that the company simply denies all HIV-positive individuals outright, without any true analysis of actuarial risk."

In May 2007, Brenman's staff, having kept close tabs on insurance regulators' progress in the case, believed the fact-finding stage of the investigation had concluded. Based on the lack of evidence Farmers had produced in its defense up to that point, the Human Rights Commission charged the company with illegal discrimination.

However, the insurance commissioner's office had reached no such conclusion.

"They were on the verge of making a finding of discrimination, and at the last minute they changed the finding to no discrimination," Brenman said in a recent interview.

In August 2007, Kreidler's office determined material eventually provided by Farmers "demonstrated that a bona fide statistical difference in risk or exposure had been substantiated" and therefore the denial of life insurance to Hebert was fair discrimination.

Brenman demanded to see what evidence Farmers had provided after his office had issued its finding, but received only heavily redacted documents from the insurance commissioner's office. In a December 2007 letter, Kreidler said his office would not turn over the redacted material Brenman's office sought because it contained Farmers' "trade secrets" that had to be protected.

Brenman appealed to the Attorney General's Office, which declined to intervene.

"Because we were not able to examine the data, we were forced to change our finding of discrimination to a finding of 'under investigation,' " Brenman said.

Hebert has since filed a lawsuit in Thurston County Superior Court, seeking the undisclosed portions of the documents under the state Public Disclosure Act.

His Seattle attorney, Jesse Wing, said documents that the insurance commissioner has turned over "strongly suggest" that Farmers did not do an individual determination of the validity of Hebert's application, or the application of any HIV-positive person, before denying them.

Only after Hebert's complaint did the company conduct an analysis, Wing said, and "in a collaborative fashion with the Office of Insurance Commissioner."

"The correspondence shows that rather than holding Farmers to its own analysis, (the insurance commissioner's office) actually worked with Farmers to determine what standards to use," Wing alleged. "This is not in my view consistent with the obligation of the insurance commissioner."

Although the insurance commissioner's office refused comment on the case, in general, a spokeswoman disputed Wing's assertion that it had worked with Farmers in establishing legally acceptable criteria.

"We do not believe the correspondence shows that the OIC worked with Farmers to determine what standards to use," Stephanie Marquis said. "We also do not agree that it was only after Mr. Hebert's complaint that the company conducted an analysis, and we specifically deny that the company conducted its analysis in a collaborative fashion with our agency."

In November 2007, a state auditor's investigation found that Brenman had used his position to expedite and facilitate the investigation into the complaint brought by a human rights commissioner, "contrary to normal agency procedures." Brenman denies the allegation, which has been referred to the state Ethics Board.

On Jan. 9, Brenman was fired by a unanimous vote of the Human Rights Commission, which cited the audit among other "administrative problems," according to commission Chairwoman Yvonne Lopez Morton, of Spokane.

Two complaints of HIV discrimination by insurance companies, including Hebert's, are currently on file with the Human Rights Commission.

Source: tmcnet.com

Farmers Insurance: “The way the policies are written are really deceitful,”

2009-01-27T21:42:00.000-08:00

Bill’s Automotive update
Just down the hill from the slide, Bill King continues sorting through mud-covered debris at the site of his auto shop, which was destroyed by the landslide. King also hopes to find another location to continue his business.

A relief account at US Bank has accumulated approximately $525, which King said will help his efforts. King also continues to battle his insurance company, Farmers Insurance, over his losses.

King reported the company paid $30,000 to cover the cost of the vehicles damaged in the slide, but it will not cover other costs, including the six lease payments remaining on his equipment. King said he read through his policy, which specifically excluded landslides, but that it was buried in a “textbook” of endorsements.

“The way the policies are written are really deceitful,” King said. “It’s all in code.”

King, who rented the building for his business, is eligible for property tax relief from Clackamas County through an “Act of God” provision covering the storm that caused the landslide. The provision, which is available to all property owners and includes business and personal property, allows for a reduction in taxes based on the scope of the damage and the date the damage occurred.

Those who sustained property damage may receive a prorated portion of their property taxes, which is valued as of Jan. 1 of each year — the day before the landslide. The filing deadline for tax relief is the end of the tax year in which the destruction occurred or 60 days after the date the property was damaged or destroyed, whichever is later.

Source: sandypost.com

Farmers Insurance had the most complaints lodged against it during the storm season

2009-01-22T21:46:00.000-08:00

It happens like clockwork.

Lately, it seems like every winter a storm blasts through Washington state bringing with it rain, wind and property damage.

If your roof gets swept up in hurricane-force winds, if a tree falls on your garage, are you covered by insurance?

Sometimes homeowners think they’re fully covered for things such as roofs, when they’re only really covered on the depreciated value of the roof, a decade after it was put on. Those can be hard, frustrating lessons, and sometimes, when an argument between homeowners and insurance companies gets heated, the state becomes involved.

In the last few years, countless people on the Twin Harbors have received a crash course in homeowners insurance coverage. Experiences have varied widely, but many have been frustrated by it.

The Daily World recently analyzed complaints filed with the state Insurance Commissioner’s Office resulting from a December 2006 storm and the big December 2007 storm.

A complaint registered with the Insurance Commissioner doesn’t mean an insurance company has done anything wrong, said Eric Mark, the public records manager for the state office. In fact, according to state investigator records obtained by The Daily World, most times insurance companies have not broken any regulatory rules at all.

But while many times rules may not have been broken, some policy holders feel so frustrated they still contact the Insurance Commissioner.

By the numbers

Statewide, Farmers Insurance had the most complaints lodged against it during the storm season, tying Allstate Insurance after the December 2006 storm with 11 complaints and garnering another 11 complaints from the December 2007 storm, for a total of 22.

Allstate had a total of 15 complaints from both storms. Farmers-owned Foremost Insurance had the third-most complaints filed, receiving 10 complaints from both storms.

Farmers’ top status for complaints received by the Insurance Commissioner is actually on par with the complaints the company gets year-round. For homeowner policies in 2007, Washington residents filed 101 complaints against Farmers, which had about a 13 percent market share of the state, the state agency says. In 2006, there were 72 complaints filed against Farmers. In both years, no other insurance company garnered as many complaints.

That compares, for instance, with State Farm Insurance, which had 55 complaints in 2007 and nearly 20 percent of the state’s market share — the highest share of any company. It registered only 43 complaints in 2006. During the past two December storms, just four complaints were filed against State Farm.

A spokesman for Farmers did not return phone calls seeking comment.

It was Farmers that took the Insurance Commissioner’s Office to Thurston County Superior Court in November over a couple of the case files The Daily World sought to review in a public records request for this story. Farmers initially didn’t want the state to release any of the information contained in two of the files, citing “trademark” protections. But during the court hearings, the company eventually changed its point of view and with a judge’s blessing released redacted information.

Mark, the public records manager for the Insurance Commissioner’s Office, says it’s been a couple of years since an insurance company has contested a public records request in court.

Some complaints

Complaints range from frustrated homeowners to cases that may be bound for court.

Sharon Longwith — one of the few people who allowed The Daily World to print her name for this story — said she thought she had a rock-solid policy that would have covered her house in all kinds of situations.

But she told The Daily World that Farmers partially denied a claim she and her husband filed with the insurance company following the December 2007 storm.

The storm had soaked the south side of her home, but she says the company wouldn’t pay for all of the damage “because the storm didn’t put a hole in my wall.”

That’s why she filed a complaint with the insurance commissioner’s office. When that didn’t help, she turned to FEMA for help. And when FEMA turned her down, she was able to find some financial assistance through the U.S. Department of Agriculture’s rural development program.

“Without the U.S. Department of Agriculture, I think we’d still have damage today,” Longwith said last month. “They gave us the money to hire a contractor, to repair the damage and are truly unsung heroes. I don’t think many people know they can get help through them.”

But some folks aren’t as lucky as Longwith.

A Rochester couple filed a complaint against Farmers following the December 2007 storm because the water around their home had risen to such a level that they actually had to be evacuated. The couple is named in the state documents but asked The Daily World not to identify them.

In their initial complaint letter to Insurance Commissioner Mike Kreidler, they wrote, “The flood water destroyed our insulation and heating ductwork completely, the skirting is waterlogged and will also need to be replaced. Our home has a cold-dampness inside and we have been using space heaters 24/7 to keep the cold/damp air at bay. This has resulted in a high electric bill; $191.00 for December. You can see the water in the floor ducts throughout the house.”

Their complaint wasn’t that Farmers wouldn’t cover their damage, but that the company was taking too long to respond. In the end, according to the Insurance Commissioner’s Office, the homeowners decided to get FEMA involved.

In Raymond, a homeowner called his insurance company, Foremost, while his power was still out, following the wind blasts of the 2007 storm. He wanted to set up a time for an adjuster right away because his home was soaked from so much rain.

“I asked if I could remove the closet carpet because of rain saturation and was told NOT to touch anything until the adjuster saw the damage,” wrote the complainant, whose name has been redacted from the state report. “I told her that the water will move through the area and she said this was ‘Due Process’ and that I needed to adhere to it.”

He was also concerned because when an adjuster did come out, the adjuster allegedly didn’t look under tarps on the roof or do an adequate inspection, resulting in a lower-than-expected settlement offer, according to the complaint.

Even though the state investigator didn’t find that the company did anything wrong, just the mere fact that the Raymond man complained seemed to speed up the process for him, according to the documents obtained by The Daily World.

Then there’s another incident in Raymond, which may very well end up in court.

A Raymond man, whose name has also been redacted from the state reports, complained to the Insurance Commissioner’s Office because Safeco Insurance had denied his claim. During the December 2007 storm, the rain had saturated the ground around his home to the point that the foundation shifted.

Safeco claimed that the foundation shift was caused by an “earth movement, meaning the sinking, rising, shifting, expanding or contracting of earth, all whether combined with water or not,” and so the claim isn’t covered under the homeowner’s policy.

According to notes from the state investigator, “Safeco seems to think that if 50 percent or more of the damage wasn’t caused by the wind, they won’t pay on anything.”

Amid the documents released to The Daily World is a report filed by an expert hired by the insurance company saying all the damage was caused by the “earth movement” while the Raymond man has documents on file from an engineer that indicate that when the ground was softened, it was the wind that blew the foundation off, which should then be covered.

The state investigator said there was nothing she could do and recommended the man contact an attorney, which she later noted he did.

Know your policy

But the term “earth movement” is one that should be remembered by everyone seeking insurance, according to Hoquiam Mayor Jack Durney, who also owns Durney Insurance in Hoquiam, and was willing to review some of the Insurance Commissioner files with The Daily World.

“There isn’t a regular home policy out there that covers earth movements,” said Durney.

And those who are concerned that their foundation may slip because of soggy ground may just be out of luck.

“A lot of the Harbor here is built on fill,” Durney said. “And there are places where earthquake insurance coverage just won’t take.” Or, if a policy can be found, it won’t ever be affordable because of the high risk factor.

Typical homeowner’s insurance won’t cover flood damage, either, Durney notes. A number of the complaints filed with the Insurance Commissioner’s Office had to do with flooding, but nearly every time the state had to reject the complaint because there was no flood policy.

Homeowners concerned enough about flooding need to buy such a policy through the National Flood Insurance Program, independent from any other policy, Durney said.

Durney also found that one of the biggest complaints he hears is the difference between a policy that covers the “actual cash value” of, say, a damaged roof, compared to a policy that will fully cover the cost to repair a roof.

“There’s such a huge difference both in the premium the homeowner pays and the amount of coverage that results,” Durney said.

With “actual cash value,” the homeowner will only be compensated with what the roof is worth in today’s dollars. That’s often thousands of dollars less than what it will cost to get a new roof.

The homeowner is stuck with the bill for whatever the difference is. Don’t like that idea? Durney says take a look at your policy to make sure it’s not there and contact your insurance agent to change policies right away.

“I would be more inclined to say that although there can be a big difference in premium, it is well worth it because the ‘replacement’ policy will do just that — hire a contractor to repair or replace the damaged part of the home. ‘actual cash value’ is much like the collision coverage you have on a car in that depreciation is taken into consideration. So, if you have a roof that is in bad repair and is old, the insurance company will only pay you the depreciated value — much like an old car that you wreck.”

Planning on renovating the home? A new homeowner’s policy may be your best bet, Durney also advises.

“The trick with insurance policies is making sure what you want is in your policy before a disaster happens,” Durney said. “That means asking lots of questions and having an agent or someone who can actually give you answers.”

That way insurance holders won’t be on their last legs with no one else to go to but the Insurance Commissioner — or an attorney.

Want to see more complaints or file one? Visit https://fortress.wa.gov/oic/complaints/

Got an Insurance Commissioner question? Call the Insurance Consumer Hotline at 1-800-562-6900.

By The Numbers

Complaints after Dec. 2006 & 2007 storms:

Farmers 22

Allstate 15

Foremost 10

Hartford 4

Liberty Mutual 4

State Farm 4

Safeco 3

Pemcu Mutual 3

Balboa 2

Grange 2

Metropolitan Property & Casualty 2

Mutual of Encumclaw 2

USAA Casualty 2

Zurich American 2

Amco 1

American Alternative 1

American Family 1

American Federation 1

American Security 1

American States 1

Amica Mutual 1

California Casualty 1

Canfield & Associates 1

Contractors Bonding & Insurance 1

Country Mutual 1

Esurance 1

Guideone Mutual 1

Homesite 1

Lexington 1

Mt. Hawley 1

North Pacific 1

QBE 1

Standard Fire 1

Truck Insurance 1

Source: thedailyworld.com

Farmers Insurance "Not Evaluating My Daughter's Claim Appropriately"

2009-01-02T15:24:00.000-08:00

Let me begin by saying that I have been an insurance adjuster for over 12 years. I know how to evaluate an injury claim.

My 17 year old daughter was a passenger in my car that was being driven by her boyfriend when he crashed head on into a tree totalling my car and injuring my daughter. The Farmers adjuster has been responsive to me but is not evaluating my daughter's claim appropriately. I have tried and tried to talk to him about it but he is not moving in his negotiations! I sent a letter to the WA Insurance Commissioner (copy is attached) and they responded that although they do not agree with Farmers' evaluation of my claim, they can not do anything to help me.

I met Rob Dietz while traveling last week (a little miracle). As you may recall, he played a crutial role in the lawsuit against Farmers for using Colossus bodily injury evaluation program. He told me that he had just found out that Farmers is using another evaluation program called "Claims Management." This needs to be made known to the public and I'm not sure how to do it. I can not believe that Farmers lost a law suit for using Colossus and had to pay over $60 million and now they are using ANOTHER evaluation program. This is unethical at best!

I feel like I am being forced to hire an attorney to represent my daughter against MY OWN INSURANCE POLICY!!!

Help!!

Yvette Baldwin
Parent of Jacqueline Trevino

Farmers Insurance Company of Oregon Accused of “calculatingly malicious” in its Refusal to Pay

2009-01-02T15:03:00.002-08:00

Owners of landslide home are first to sue insurer
Hendricksons say they were told 'earth movement' would be covered
By Shasta Kearns Moore

The Southwest Community Connection, Jan 1, 2009

HILLSDALE — The owners of the four-level home that cascaded down a hill into two other houses on Oct. 8 are the first of seven affected households to file suit against their insurance company for denying coverage.

Dave and Kathei Hendrickson allege in the $2 million complaint filed Dec. 10 in Multnomah County Circuit Court that Farmers Insurance Company of Oregon had been, at times, “calculatingly malicious” in its refusal to pay for any damage resulting from the landslide — which demolished the Hendricksons’ house and nearly everything in it.

Kathei Hendrickson was home when the slide occurred in the early morning and barely escaped thanks to quick action by her neighbors. The house and several hundred tons of debris are still sitting at the bottom of the hill, where the road — a portion of Terwilliger Boulevard — has been closed indefinitely.

Many of the homeowners are still not allowed back in their houses and are living with friends or in rental units as they continue to make mortgage payments.

Landslides are generally not covered
According to insurance and landslide experts, “earth movement,” as it is called in the insurance industry, is typically not covered by homeowner’s insurance and requires an extra — and extremely rare — policy.

However, the Hendricksons claim in their suit that a Farmers Insurance agent told them when they bought a “Protector Plus Homeowners Package” in 2005 that it would cover all eventualities, including earth movement.

According to the Hendrickson’s attorney, Bob Bonaparte, the agent “essentially told them they would be covered for every risk … so they purchased the policy, and lo and behold they weren’t.”

A claim denial letter dated Dec. 2 from Farmers Insurance Company of Oregon to the Hendricksons points to language in the policy that they say specifically denies coverage of damage resulting from earth movement, and any of its possible causes.

“The policy repeatedly emphasizes that landslide is never covered under this policy, however caused — whether combined with water or the negligent acts or omissions of people,” states the letter signed by Michael D. Flynn of Farmers Insurance.

What caused the landslide?
Insurance company experts, city engineers and others have all cited an unnatural water saturation of the hillside as the most likely cause of the landslide — though, as most of the evidence was washed away in the slide, the true, specific cause will likely never be fully known.

Records from the city’s Water Bureau show an excessive use of water since the last meter reading on July 31 — about 20,000 extra gallons, according to Dr. Wesley Spang, an engineering expert hired by Farmers Insurance. However, Spang and others have not been able to determine over what period of time the water use occurred nor whether it was intentional or caused by a leak.

According to legal documents, the release of excess water could have been triggered by several contractors working on the property in recent years. Two days before the slide, Team Clean Windows and More, LLC, power-washed the house; 10 days before, Harrity Tree Specialists removed an 80-year-old cedar tree; and in recent years, an unnamed contractor broke up concrete in front of the house and another installed a sprinkler system.

Regardless, says Farmers Insurance, the Hendricksons would not be covered for any of those possible causes.

Settlement conference
In addition, the other six households affected by the catastrophe have all been denied claims against their own insurance companies and many are preparing claims against Farmers Insurance under the liability portion of the Hendricksons’ policy.

Though the Hendricksons’ complaint includes a request for a jury trial, their lawyer expects that in the middle of 2009 all of the parties to the various lawsuits — including the contractors — will sit down and negotiate who should pay what.

“Lawsuits should be flying any day,” Bonaparte said. “Ours was simply the first.”

Read the Lawsuit: Hendrickson vs Farmers Insurance Company of Oregon

Source: swcommconnection.com

Video: Man Feels Burned by Farmers Insurance Group/Foremost Insurance

2009-01-02T15:01:00.000-08:00

Feeling burned by his insurance company
December 31, 2008 - 6:40 PM

SOUTH HAVEN, Mich. (NEWSCHANNEL 3) - He wasn't burned by the flames, but a man close to a boat explosion that occurred in South Haven over the fall now says his insurance company is burning him.

The owner of the boat suffered serious burns when the boat exploded, and a woman and child inside the boat were also injured, but now another boat owner nearby on that afternoon says he's dealing with financial damage.

The boat sits in storage, but the damage from the explosion is still evident, the plexi-glass is gone, the fiberglass is cracked and the cover has melted into the foam supports.

"I didn't hear a bang or a loud noise, all I heard was a whoosh," said Steven Eberhard, recalling the Sunday in October.

Eberhard first helped the three people injured in the accident.

"She was screaming for help and I said, 'jump in the water,'" Eberhard said.

Steven then turned his attention to his 44-foot boat, which was just two boats upriver from the flames.

"All I heard people saying was 'get your boat out of there, get your boat out of there," Eberhard said.

Today, Eberhard's boat sits on blocks in a warehouse. At his home in Jackson, he showed Newschannel 3 how the costs for repairs quickly added up, he estimates the total will be close to $50,000.

Eberhard has insurance with Foremost, but he says when he contacted him he was told something that surprised him.

"I has not been determined who is at fault, and I said, 'I wasn't at fault'" said Eberhard.

Eberhard says the claims adjuster told him that conclusion could take years, and that he now has to pay the two-percent deductible, which is about $4,000.

Eberhard says his option are either to wait for Foremost Insurance to pay or to sue the owner of the boat that exploded.

"Well I don't want to sue him, gee, he's had enough problems on his own," Eberhard said. "My boat was damaged, I was hurt, I was doing a kind deed, trying to help people and how do I get repaid?"

Eberhard says that none of the other boat owners with damages have had problems with their insurance companies, and that includes the man whose boat exploded, a man Eberhard says also has a policy with Foremost.

Newschannel 3 left messages with officials at Farmers Insurance Group as well as with the Foremost Insurance Division, but did not hear back.

Source: wwmt.com

Farmers Insurance Blames Santa Cruz County for Fire

2008-12-18T20:43:00.000-08:00

Insurance giant says county liable for Trabing Fire
Kurtis Alexander - Sentinel Staff Writer

In claims filed with Santa Cruz County, Farmers Insurance Group contends county officials contributed to the spread of last summer's Trabing Fire by failing to keep roadsides free of flammable vegetation and harboring conditions that advanced the flames.

The county denies the charges, and on Tuesday, the Board of Supervisors dismissed a dozen requests by the insurance giant for nearly $3 million worth of property damage that resulted from the fire.

Attorneys for the county declined comment, citing the possibility of a lawsuit and a policy of not discussing litigation. The issue has yet to proceed to court.

The Trabing Fire started June 20 when a vehicle on Highway 1, at Buena Vista Drive, sprayed hot exhaust into dry grass. About 630 acres burned, including 26 homes and nearly 50 other buildings.

While the county is not responsible for maintaining the state highway, Farmers Insurance alleges that once the fire started, overgrown vegetation on nearby county roads fanned the flames and contributed to the destruction.

"The injury to plaintiff's insureds was approximately caused by this dangerous condition," the claims read.

Officials with Farmers Insurance declined to immediately comment.

Cal Fire Chief John Ferreira, the state's top fire official in Santa Cruz County, says the county's vegetation management practices probably had little to do with the fire and its advance.

"Even had the roadsides been mowed, the fire would have raced through there because of the weather conditions and dryness," he said.

Only bare ground would have stopped that fire, Ferreira said, something that is virtually impossible to provide.

This is not the first time the county's vegetation management program has drawn criticism.

In 2005, the Board of Supervisors imposed a ban on the use of herbicides to control roadside brush, which triggered concerns among the public, as well as some in the Public Works Department, that the county would not be able to keep up with its pruning responsibilities.

Mowing the vegetation, which many said was more environmentally friendly than spraying, takes longer and costs more.

Jane Amaral, a Farmers Insurance customer who lost a greenhouse to the Trabing Fire, said she took note when the county changed its clearing methods and has since seen more brush accumulate along Larkin Valley Road.

"When they sprayed it, it didn't come up as fast," she said. "The mowing doesn't seem to be as efficient."

Amaral, who has already received her insurance payment, is among those whom Farmers Insurance is trying to hold the county liable for.

Public Works Director Tom Bolich acknowledged Tuesday that the new vegetation management practices don't accomplish as much as when herbicides were used. But, he said, they meet their primary goal of ensuring safe clearance and visibility on 270 miles of county roads.

The claims submitted by Fire Insurance Exchange, a division of Farmers Insurance, convey the damages of 12 Farmers Insurance customers on Trabing Road, Larkin Valley Road and Azure Lane, and ask the county to pay losses on buildings as well as certain living expenses of fire victims.

Source: santacruzsentinel.com

Farmers Insurance Engaged in Unfair Discriminatory Practices to Overcharge in Texas

2008-12-12T07:09:00.000-08:00

Are You In Good Hands?
How home insurance companies in Texas ripped you off—and why it might not happen again.
Dave Mann | December 12, 2008 | Features
Rick Perry was talking tough. It was August 5, 2002, and the Texas governor had been joined at a news conference in Houston by John Cornyn, the state’s attorney general. They announced to the assembled reporters that the state had sued Farmers Insurance, one of Texas’ most prolific writers of home insurance policies, for deceptive trade practices. Cornyn’s office had been investigating the home insurance market, where premiums had ballooned out of control. And now the state had made its first case.

“The investigations are still ongoing, but the findings reflect that at least one company—Farmers Insurance—has engaged in unfair, discriminatory practices to charge consumers excessive and unjustified rates,” Perry told the press. The company, Cornyn added, “has put its own financial gain ahead of the well being of Texans. You don’t do that in Texas.”

But, of course, they had been doing it. In 2002, Texans were paying, on average, the nation’s highest rates for homeowners insurance. That was an impressive feat, given that prices for homes in Texas lagged far behind those in California, New York and Florida. In the previous two years, the state’s big insurers had jacked up premiums. Insurance companies said they were bleeding money from too many expensive claims. But they also had ruthlessly exploited a loophole in state law that allowed them to raise rates unfettered by regulation.

While Perry and Cornyn had ostensibly come to Houston to announce a civil court filing, the political overtones were obvious. The two Republicans were on the November ballot—Perry running for his first full term as governor and Cornyn aiming for the U.S. Senate—and with Election Day just three months off, home insurance had become the 2002 campaign season’s top issue. Texas homeowners were seething. They wanted their rates cut fast.

It was a particularly perilous issue for Perry. He was favored to win. But his Democratic opponent, Tony Sanchez, had seized on the crisis and begun a populist call for stricter regulation that would force the insurers to lower premiums. He hammered Perry for sitting idly by while rates climbed. Sanchez’s campaign was clumsy at times—he named his campaign bus the “Lower Rates Express”—but Perry clearly saw a dangerous political issue.

The governor quickly devised his own reform plan and began criticizing the industry’s greed. Perry, an avowed free-marketeer, seemed an unlikely politician to crack down on big insurance companies. Texas Republicans have long found common cause with the insurance industry against Democratic-leaning trial lawyers, and Perry had received more than $1 million in campaign contributions from insurers at that point in his career.

Yet at nearly every campaign appearance, the governor promised to re-regulate the market and slash premiums. “If the industry hasn’t figured this out, listen up,” Perry told reporters at one point in the 2002 campaign. “Texans are fed up, and I will sign legislation that prevents a handful of companies from bringing the state to its knees. I am offering solutions that put Texans first. I call on the industry to do the same.”

Six years later, Texans are still paying the highest rates for home insurance in the country. The industry has earned billions more than it would have if stricter regulation had been imposed, according to consumer groups; in 2004 alone, the added profit was $4 billion. In 2006, Texas insurers enjoyed one of their most profitable years on record.

The problem wasn’t inaction. Perry and the Legislature passed a sweeping, complicated reform bill in 2003. But the legislation was crafted largely by lobbyists for the insurance industry, imposing the lightest possible regulation. The state remains nearly powerless; insurers in Texas can raise rates by simply notifying regulators.

In January, the Legislature will once again take up home insurance. Six years after siding with the industry, lawmakers will have another chance to fix the system. While the insurance companies will almost assuredly run a similar play—wouldn’t you?—the political environment appears to have changed. Some key legislators are already talking about the need for more regulation. The 2009 session may be consumers’ best chance for meaningful reform in a very long time—assuming history doesn’t repeat itself.

On August 21, 2002, just two weeks after Perry and Cornyn filed their lawsuit, representatives of the largest insurance companies in Texas, including the big four of Farmers, Allstate, State Farm, and USAA, received a fundraising letter from Bill Hammond, president of the Texas Association of Business (TAB). The business group was stockpiling money for an ad campaign that would deliver four million mailers to aid a slate of 22 Republican candidates. The mailing campaign was part of a highly coordinated effort, fronted by then-Congressman Tom DeLay, to capture the Texas House for the GOP and elect Midland’s Tom Craddick speaker. The highly partisan Craddick was a controversial choice. His backers knew they would need a supermajority to install him. To elect that many Republicans would require a lot of campaign money. For that, they turned, in part, to the insurance industry.

Hammond’s letter made clear why big insurers should support the Republican slate: “While this program is costly, there is no doubt that this is a real opportunity to make a difference in the political climate in Austin.”

The industry responded. Insurance interests accounted for $237,000 of the $1.7 million worth of mailers attacking Democrats that TAB sent out in the months before the election, as reported by the Austin American-Statesman. (Spending corporate money on campaigns is illegal in Texas, and TAB and some of its funders would later be indicted for their actions in 2002, as would DeLay.) Farmers ($150,000) also contributed money to DeLay’s Texans for a Republican Majority. On Election Day, nearly all the candidates backed by the DeLay operation won, boosting Craddick into power at the head of a 26-seat Republican majority.

In all, big insurers in Texas spent at least $1.1 million in the 2002 election to support Republican legislators, Perry and Lt. Gov. David Dewhurst. This was highly out of character. Insurance interests have rarely played such a large role in Texas campaigns. But in 2002, the industry badly needed friendly politicians in power.

Home insurance rates in Texas had begun to rise sharply in 1999. The excuse was partly a rash of mold claims filed across the state. But the industry had also lost a bundle in the stock market when the tech bubble collapsed. Consumer advocates had seen this before: when insurance companies lose big in the stock market, they invariably try to cover the investment losses by raising rates on consumers. And in Texas at the time, the industry could gorge itself on rate hikes because of a quirk in state law known as the Lloyd’s loophole.

This gets complicated—as is often the case with insurance policy—but essentially state law at the time left a certain type of insurance policy, known as Lloyd’s policies, unregulated. These were policies originally meant for homes that had unpredictable risk, perhaps because of their high value or because of where they were located. Once the secret got out, though, nearly every insurer in Texas began shifting as many homes as possible into Lloyd’s policies to escape the reach of state regulators. By 2002, about 95 percent of home insurance policies in the state were unregulated. And like teenagers who had suddenly escaped their parent’s supervision, insurers hiked rates—in some cases doubling premiums.

With the insurance market in crisis, some level of reform was inevitable. The market would have to be re-regulated and the Lloyd’s loophole closed. The political environment demanded it. The open question was just how stringent the new regulatory structure would be. Many Democrats were touting forced rate rollbacks. They also wanted a reform package that would empower the Texas Department of Insurance to approve rates before companies could put them into effect. This approach is known as “prior approval.” For the industry, it sounded as pleasant as dental surgery.

Big insurers much preferred the plan that Perry put forth: “File-and-use.” Under this system, insurers can raise rates without approval and simply have to notify regulators of their premium increases. Proponents say file-and-use allows the market to set the rates and improves competition, which, they say, leads to lower premiums.

Not long after Election Day, it became clear that insurers would have big sway during the upcoming legislative session. In November, after Craddick claimed the speakership, he appointed a transition team, three men who would serve as gatekeepers to the speaker’s office throughout 2003. Two of those men were political consultant Bill Miller, a Craddick confidant who was a spokesman for Farmers at the time, and Bill Messer, a lobbyist for State Farm.

The insurance industry has always exerted influence at the Texas Capitol, but the past five years, beginning in 2003, have perhaps been the zenith. The handful of consumer advocates who lobbied for stricter regulation during the 2003 session recall being run over. The insurance industry had several hundred lobbyists working on its behalf, an army of influence peddlers who had little trouble winning over free-market Republicans, many of whom had been elected for the first time thanks in part to insurance money.

The GOP leadership stacked the insurance committees in the House and Senate with industry-friendly Republicans. Stringent reforms proposed by some Democrats went nowhere. Instead, the main reform legislation—known as Senate Bill 14—sailed through. The bill re-regulated the market by closing the Lloyd’s loophole but also instituted the more lenient file-and-use approach favored by Perry and the Republican leadership (not to mention the industry).

When SB 14 landed in a conference committee to reconcile it with the House version, the industry’s reps got their way even more. Several consumer protections were stripped out. (Consumer advocates say the conference committee was stacked against them. Then-Rep. Joe Nixon, a Houston Republican, was included on the committee, though he had worked little on home insurance during the session. It later came out that Nixon was negotiating with Farmers on a mold claim on his own house at the same time he served on the conference committee that was designing a regulatory framework for the company.)

“The way I think of file-and-use, you’re really playing catch-up with the insurance companies,” says Ware Wendell, an Austin lawyer who represents consumers in insurance cases and worked on insurance issues for Rep. Steve Wolens, a Dallas Democrat, during the 2003 session. Under SB 14, if the Insurance Department concludes that a company has been overcharging, it can take that company to court to win rebates for customers. The idea, says House Insurance Committee Chairman John Smithee, the Amarillo Republican who sponsored SB 14, was “to make the first line of defense the competitive market, but when that didn’t work, to have a safety valve where you’d have some adult supervision where the commissioner could step in and regulate.”

The problem is that even when regulators have challenged insurers, they have found it difficult to force companies to surrender their profits.

Since 2003, a few companies have reached settlements with the Insurance Department after regulators took them to court. Allstate, for example, settled a case in May for $51 million for overcharges in the past four years. More than 700,000 consumers will split rebates worth $37 million. That’s a whopping average of $53 each—not much, considering that the average annual premium in Texas tops $1,200. Allstate also agreed to lower rates by 3 percent. (In 2007 alone, Allstate raised rates 6 percent.) Meanwhile, Perry and Cornyn’s lawsuit against Farmers was quickly settled in 2003 for $117 million. About $82 million of that amount would be paid back to consumers.

The largest home insurer in Texas, State Farm, has never been forced to lower rates. The company and its team of lawyers have battled the Insurance Department in court for four years now. In the latest ruling this fall, State Farm won an appellate decision that sent the case back to square one. It remains in doubt whether the company, which handles 30 percent of the state’s market, will ever reduce its rates or be forced to pay back overcharges.

“If they spend a million, two million in legal fees along the way but they save 100 million in overcharges, that’s a winning economic proposition,” Wendell says.

The details of insurance policy are nearly incomprehensible to anyone but the most committed. But the end results are easy enough to judge. Did the rates drop by the 12 to 18 percent the industry promised during the debate on SB 14? No.

SB 14 did have some positive effects. More companies began writing home insurance policies in Texas, though they make up such a small percentage of the market that consumer advocates say true competition doesn’t really exist. In 2003 and 2004, many companies did reduce rates a little. The Insurance Department reported that by 2006, 35 of the 37 companies in Texas had cut rates, though some by only a few percent. But two of the biggest insurers, State Farm and Farmers, didn’t lower rates at all, and together they make up about 40 percent of the market. In all, rates dropped about 4 percent by 2006, nowhere close to the reductions promised by the industry. And in the past two years, some homeowners have seen their rates tick back up. In April 2008, State Farm announced an increase of nearly 3 percent. Farmers implemented a 10 percent increase in October.

Looking at the market as a whole, rates have roughly leveled off since 2002, says Alex Winslow, director of the consumer advocacy group Texas Watch. Premiums are just a tad below the 2002 levels that helped fuel the insurance crisis.

But Texas still leads the nation in homeowners insurance rates: The average premium is $1,200 to $1,300. The only state even close to that level is Louisiana, with average premiums of $1,100. The national average is about $800.

While it was touted as “re-regulation,” SB 14 also deregulated insurance policies. Before 2003, insurers offered only a handful of plans. Now companies sell a wide range of complex policies. The industry argued in 2003 that not everyone needed a “Cadillac” plan, and that more options in the market place would fuel competition and drive down prices. But Winslow says that the new insurance policies simply offer less. With rates remaining mostly constant, Texas consumers have continued paying high prices for less coverage.

The policies have become so complicated that most consumers don’t know what’s in their plan. The complexity makes it nearly impossible for average homeowners to comparison-shop. Even the experts have trouble.

“If you ask me what endorsements I have on my policy right now, I couldn’t tell you,” says Wendell, the consumer lawyer. “They send you one piece of paper at a time, saying your policy has been changed to endorsement E-1743, and you’re trying to ask yourself, ‘OK, what does that mean?’ I think choice is great, but you can easily become paralyzed by it.”

The industry loves it. With Texas homeowners receiving less coverage, the insurance industry has paid out less and less money in claims. Even with an occasional spike following Hurricane Rita (and presumably Ike, though the numbers aren’t public yet), Texas insurers were paying out an average of $400 worth of claims per policy in 2007, down from nearly $800 in 2001. Remember that the average premium is more than $1,200. Everything between the $400 paid out in claims and the $1,200 received in premiums is profit—which translates to roughly $800 in profit on average on each homeowners policy in Texas, minus overhead, according to calculations by Texas Watch.

So it’s no surprise that insurers want to maintain the system. Industry groups argue that the file-and-use approach is just beginning to take effect and should be given more time to work.

They also contend that high premiums are needed to cover the costs of major weather disasters in Texas. But other large states suffer weather catastrophes, and homeowners still pay much less for insurance. “Every time I turn on the TV, something apocalyptic is happening in California,” says Wendell. “You have hurricanes brutalizing Florida. And yet their rates are not what we have in Texas.” Floridians pay an average of about $1,000 per premium. In California, it’s $800 to $900. In both states the homes being insured are, on average, far more expensive than those in Texas.

For his part, Smithee, the man who carried SB 14, believes the system has created a more competitive market, but adds that insurers have clearly overcharged consumers in recent years. Smithee has tried to balance industry needs with those of consumers but sometimes finds himself outvoted by industry-friendly members on his committee. He says that Texas’ severe weather does lead to higher rates. “We’re always going to be at or near the highest in the nation,” he says. “Our losses are just so much higher than other states’.” But he concedes that the regulation laid out by SB 14 wasn’t strong enough. “We can’t just turn this whole market loose and say it will work on its own,” he says. “It will probably work most of the time. But in those times when the competition doesn’t work, the consumer is very vulnerable.”

In 2009 when the Legislature once again debates homeowners insurance, consumers will have an all-too-rare chance at genuine reform.

In the two legislative sessions since 2003, Speaker Craddick made sure that few reform bills escaped the House Insurance Committee to come up for votes in the full House.

But next year the dynamic will change for two reasons. The House is more closely divided, meaning Craddick may not be speaker, which may give Smithee more leeway. More important, the Insurance Department is undergoing sunset review, the regular process by which the Legislature examines state agencies. That ensures that an insurance bill will move through the Legislature. Many Democrats and Republicans, having heard from angry homeowners in their districts, are pushing for more stringent regulation. With foreclosures on the rise in Texas, many lawmakers realize that reducing consumers’ insurance bills may allow more folks to keep their homes.

Several lawmakers have indicated they will try to pass a prior-approval system. In September, state Sen. Juan Hinojosa tried to convince the 12 members of the Sunset Committee to recommend a prior-approval system. The measure lost, but by just one vote. The sunset panel’s recommendations will be the starting point when the Legislature convenes in January. Where the debate goes from there is anyone’s guess.

Consumer advocates would like a prior-approval system. They also want the number of available insurance policies reduced and the state’s insurance commissioner to be chosen through election instead of appointment by the governor, a change that has worked well in California.

Smithee is advocating a compromise plan. He wants to strengthen the Insurance Department’s hand but worries about the dangers of too much regulation, which, he says, could drive companies out of the market. Smithee would prefer a hybrid approach in which most companies must obtain prior approval for their rates, but the Insurance Department could shift select insurers (who have proved good actors) into a file-and-use system to spur competition.

Not surprisingly, the industry wants even more deregulation, which Smithee says would be a “big mistake.” The insurance industry’s influence hasn’t diminished. It will once again employ some of the most skilled lobbyists in the Capitol. And much will depend on who wins the House speaker’s race.

As Winslow of Texas Watch points out, this is consumers’ best chance at reform since 2003. Insurers “are always going to have pull,” he says. “But this is as good a [political] environment on this issue as consumers have seen in a long time.”

Source: texasobserver.org

Portland Couple Sue Farmers Insurance Company of Oregon

2008-12-11T20:29:00.000-08:00

Portland owners of sliding house first to sue insurance company
by Aimee Green, The Oregonian
Thursday December 11, 2008, 5:33 PM
The owners of a Southwest Portland home that slid down hill, smashing into two others Oct. 8, are suing their insurance company for at least $2 million for failing to pay up.

The suit filed by Kathleen and David Hendrickson, who lived at 6438 S.W. Burlingame Place, contends that Farmers Insurance Company of Oregon won't pay for their losses even though their insurance agent promised that their policy would provide comprehensive protection. The suit states that long before the slide the agent visited and inspected the Hendricksons' property, and told them their policy covered "earth movement." A mistake, however, was made in the written text of the policy, which said it didn't cover earth movement, the suit states.

A city investigation into the slide's cause cited backyard sprinklers and high water use as leading suspects. The suit states that the slide was caused by a "sudden discharge of water" and/or a "shaking of the earth" that happened as a stump on the property was ground up.

The Hendricksons are the first among the affected homeowners to file a lawsuit, said their attorney, Robert Bonaparte.

Two homes, including the Hendricksons', were destroyed. Another was damaged. Two others are considered too dangerous to live in.

Some of the affected homeowners have filed claims against the Hendricksons, Bonaparte said last month. The Hendricksons' insurance company has agreed to defend against those claims, he said.

-- Aimee Green; aimeegreen@news.oregonian.com

Source: oregonlive.com

Farmers Insurance broke the law by failing to disclose a $5 service charge

2008-12-11T20:28:00.000-08:00

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.

Source: signonsandiego.com

Farmers Insurance Sued Again for Denying Claim

2008-12-09T07:00:00.000-08:00

Couple seeks payment from Farmers over damaged foundation claim

By Kelly Holleran

A Jefferson County couple has filed suit against Farmers Insurance Exchange, alleging the company wrongfully denied their insurance claim.

Kenneth and Nancy Mann filed a claim with Farmers Insurance Exchange on May 8 after they discovered damage to the foundation of their home, according to the complaint filed Dec. 3 in Jefferson County District Court.

Although the claim was covered under the Manns' policy, Farmers Insurance Exchange denied it, the suit states.

Because of the company's failure to honor the claim, the Manns suffered up to $50,000 worth of damages to their home and up to $8,800 worth of additional living expenses and paid attorneys' fees of up to $18,000, they allege.

According to the complaint, Farmers Insurance Exchange violated the Texas Insurance Code and the Texas Deceptive Trade Practices Act in the following ways:

-Misrepresented to the Manns a material fact or policy provision relating to their coverage;

-Failed to attempt in good faith to effectuate a prompt, fair and equitable settlement of claim; and

-Refused to pay a claim without a reasonable investigation. javascript:void(0)

The Manns are seeking damages less than $75,000, plus costs and pre- and post-judgment interest.

They are represented by Clay Dugas and Mike Jacobellis of Beaumont.

The case has been assigned to Judge Donald Floyd, 172nd District Court.

Case No. E182-810

Source: setexasrecord.com

Farmers Insurance Increases Homeowner Rates In California

2008-11-25T06:02:00.000-08:00

California Insurance Commissioner Steve Poizner has allowed two of California’s largest home insurers –State Farm and Farmers – to increase premiums by a combined $115 million. State Farm customers will soon face an average 6.9% hike and Farmers policyholders’ rates will climb 4.1%, according to recent decisions by the Commissioner. In both cases, the nonprofit Consumer Watchdog had formally challenged the rates and petitioned Poizner to hold hearings pursuant to Proposition 103, but the commissioner rejected those requests.

In an economy like this, Californians are relying on the insurance commissioner to keep premiums as low as possible, but Commissioner Poizner refused to hold a hearing to investigate rate hikes that will affect more than 2.5 million homeowners. We reviewed the proposed rate increases and concluded that they were unjustified. The commissioner should not have allowed these insurers to jack up prices like this.

At least $20 million of the increase for State Farm was allowed as an exception to Proposition 103’s strict limit on excessive insurer expenses in order to let the insurance giant charge customers for “higher quality of [customer] service.” Included in Farmers’ rate hike was a special exception to the expense limit for millions of dollars allegedly spent on the company’s fraud prevention efforts. According to our review, the company did not meet the standard required to pass those costs on to policyholders.

We’ve noted that both State Farm and Farmers are financially well-positioned to pay claims resulting from the recent Southern California wildfires and do not need premium increases to address those losses. We intend to challenge the Commissioner’s decision allowing Farmers’ rate hike and is reviewing the propriety of the State Farm increase.

If the rates take effect, policyholders with State Farm will see an average increase of about $60 per year and Farmers customers will pay about $30 more on average.

With sinking economy, insurers turn to rate hikes

Insurance company profits are tied to their investment income and when the economy weakens companies try to push premiums higher in order to maintain high profits. We are concerned that other insurers will press the Department of Insurance for more rate hikes as their investment portfolios tank. As evidence, consider Allstate, which was forced to lower its California homeowners’ insurance rates by about $250 million last spring. Allstate requested a 6.9% rate hike increase for homeowners in September. That proposal is still under review by the Department of Insurance.

While everyone is feeling the sting of a bad economy, insurance companies want to pass the pain on to homeowners and other policyholders. The insurance commissioner stands between these companies and our wallets and Californians need him to be there.

California’s insurance reform law, Proposition 103, requires insurance companies to open their books and submit to public hearings to prove their rates are adequate without being excessive. Members of the public can challenge rate hike proposals, and the commissioner must grant a hearing if the requested change exceeds 7%. It is left to the commissioner’s discretion whether or not to initiate a full hearing for changes less than 7%, as was the case in the State Farm and Farmers matters.

In recent years, Consumer Watchdog has successfully challenged several insurance rate proposals, resulting in more than a billion dollars in savings for California policyholders.

Consumer Watchdog is a non-profit, non-partisan public interest group. In addition to being their Executive Director, Doug Heller is Consumer Watchdog’s lead legislative and regulatory advocate on insurance and energy issues. Heller spearheaded the two-year battle for the nation's strongest whistleblower protections, which are now California law.

Source: californiaprogressreport.com

Farmers Insurance Ranks Below Industry Average for Homeowners Insurance Satisfaction

2008-11-19T09:01:00.000-08:00

According to J.D. Power and Associates 2008 Homeowners Insurance Study, Farmers Insurance ranked below the Industry Average in Customer Satisfaction.

The 2008 Homeowners Insurance Study is based on responses from more than 12,900 homeowners insurance policyholders. The study was fielded in May and June 2008.

The 2008 Homeowners Insurance Study is based on responses from more than 12,900 homeowners insurance policyholders. The study was fielded in May and June 2008.

For details see: J.D. Power and Associates 2008 Homeowners Insurance Study

Farmers Insurance Ranks Below Industry Average for Auto Claims Satisfaction

2008-11-19T09:00:00.000-08:00

According to J.D. Power and Associates 2008 Auto Claims Satisfaction Study, Farmers Insurance ranked below the Industry Average in Customer Satisfaction.

The 2008 Auto Claims Satisfaction Study is based on 11,671 responses from auto insurance customers who filed a claim within the past 12 months. The study excludes customers who only had glass/windshield, theft/stolen vehicle, roadside assistance or bodily injury claims. The study was fielded from July to August 2008.

The study finds that implementing 10 specific service practices has a considerable impact on overall satisfaction
with the claims process. They are:
• Answering all customer questions
• Managing expectations regarding the settlement
• Expressing genuine concern
• Avoiding negotiated settlements
• Providing flexible appraisal appointments
• Returning phone calls
• Sharing information between representatives
• Providing proactive updates
• Ensuring customer is at ease with claims process
• Giving customers a time line and meeting it

For details see: J.D. Power and Associates 2008 Auto Claims Satisfaction Study