State Farm Lloyd’s to refund $352 million to Texas homeowners
by Carol Thompson
A 12-year legal battle has come to an end in the state of Texas.
State Farm Lloyd’s has agreed to refund $352 million in premiums to an estimated 1.2 million homeowners to settle the more than decade-long dispute between the insurance company, the Texas Department of Insurance and the Texas Office of Public Insurance Counsel.
The average refund is expected to range between $200 and $300.
State Farm repeatedly denied it overcharged its policyholders dating back to 2003. But company officials gave in after failing to win a court ruling to overturn the insurance commissioner’s original order for refunds. That order accused the company of setting its premiums for homeowners insurance far above what was necessary to earn a reasonable profit.
State Farm Lloyds customers including homeowners, renters, or condominium owners who had a policy with an effective date from September 7, 2003, through May 31, 2008, will receive a refund payment from State Farm Lloyds. Also, those whose State Farm Lloyds homeowners, renters, or condominium owners policy renewed with effective dates from June 1, 2008, through July 31, 2008 will also receive a refund.
Refunds must be issued by Sept. 16, 2016. State Farm has not admitted any wrongdoing.
The legal battle between State Farm and the insurance department began in the fall of 2003, shortly after the Legislature passed a massive insurance overhaul that called on most home insurers to lower their rates. State Farm was the only major company that refused to do so. It immediately filed suit to block the rate reduction and refund order.
After several court hearings, a state judge in 2011 upheld the order for State Farm to reimburse its customers nearly $350 million for overcharges between 2003 and 2008.
State Farm appealed the decision to the 3rd Court of Appeals, saying the payout would threaten the company’s financial stability, however, the court refused to overturn key portions of the order.
For those who are no longer insured with State Farm Lloyd’s, the company will send refunds to the last known address. Those who have moved should contact the company to update their mailing address.