Auto and Car Insurance

Can State Farm legally defraud customers?

State Farm is charging customers a rate separate from the rate that is given when the customer accepts the insurance and pays. For example: if a person pays 1,200 for auto insurance for six months, State Farm claims (and does) charge a higher rate from the moment the contract period begins - unbeknownst to the hapless customer. Can this actually be legal?

Public Comments

1. No, unless the customer doesn't inform the agent of all of the pertinent facts, like speeding tickets, prior accidents. State Farm does notify the happy customer though that the rate will increase from the quoted amount. State Farm always mails a policy and a declarations sheet and it is the happy customer's responsibility to read that. If the customer questions the rate he or she can always call the agent and ask what's up.
2. Every state has an Insurance Commissioner who oversees the insurance industry. Contact them with the details, including photocopies of any written proof you have available. There may have been a law passed that requires them to add some tax or something. But it does not sound fair the way you describe it, no. Was there some change in the circumstances, such as a person who is covered who had an accident or was arrested, which put them in a higher risk category?
3. I don't see the fraud here. A customer agreed to pay $1200 for 6 months of coverage. At the end of the contract, they can raise the rates of the customer is willing to pay. The customer can always switch carriers if they don't agree wtih the new rate. It is like an apartmnent in that the landlord can raise the rent at the end of the lease And the rate increaase is not "unbeknownst to the hapless customer" as you put it. The customer is given notice of the rate increase and they can either pay it or seek a different carrier.
4. Did you finance the insurance? Is the added charge a finance charge? Also, you did not indicate what the amount of the difference is, so it is hard to guesstimate an answer.
5. Well, from the way the question is posed, it is an oxymora. That is, a contradiction: "legally defraud". Something cannot be legal and illegal at the same time. I know, now you dislike me. But you'll thank me later. Do I sound like your parent? Run your problem by the Office of the Insurance Commissioner in your state.