Thousands of Maryland drivers have filed complaints with the state’s insurance board against State Farm over unfair auto insurance rate increases. The complaints state that the auto insurance rate increases were due to accidents where the policy holders were found not to be at fault. Some complaints have also claimed that the insurer raised their rates due to a single emergency road service call. The complaints have prompted the Maryland Insurance Administration to launch an investigation into State Farm’s practices.
Details of Auto Insurance Rate Increases
According to documents used in the state’s investigation, State Farm was the only insurer that applied auto insurance rate increases to policy holders based on emergency roadside assistance calls. The investigation found that other insurers applied auto insurance rate increases to policy holders for not-at-fault accidents, although most carriers do not apply rate hikes in such cases. The state’s investigation revealed that many of the rate hikes were unfair, including hundreds of cases stemming from a single incident over the previous three years.
State Farm Refunds Auto Insurance Rate Increases
The state agency called on State Farm to refund their auto insurance rate increases to nearly 800 customers. State Farm also announced that it would pay out voluntary refunds to more than 3,000 customers. The company also stated that it would roll back its planned auto insurance rate increases for more than 1,100 customers. The investigation into State Farm’s rate hikes could eventually impact thousands more drivers, as the company has the largest auto insurance market share in the state.
Auto Insurance Rate Increases Stopped For Not-At-Fault Incidents
The state’s investigation found that the letters detailing the company’s auto insurance rate increases were not specific enough. A Maryland insurance investigator told a local reporter that the reasons the company used to defend its rate hikes “(did) not satisfy the requirements of Maryland insurance law.” As a result of the investigation, State Farm announced that it would discontinue its practice of setting auto insurance rate increases for drivers with not-at-fault accidents on their records. The halt on auto insurance rate increases also applies to emergency road service requests.
Auto Insurance Rate Increases Set For Policy Renewals
The investigation has led State Farm to reword its letters regarding future auto insurance rate increases. The letters will now include more details as to why the company is seeking auto insurance rate increases. Drivers may also see rate hikes when the time comes to renew their policies. According to a State Farm spokesperson, the company raised its rates by less than one percent in 2014. Maryland insurance regulators will continue their investigations into the reasons behind these rate hikes.
Source: Insurance Business America
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