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Texas Farmers Auto Insurance FSPA Class Action Lawsuit

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This class action lawsuit claims that Farmers Texas County Mutual Insurance Company (Farmers Texas) offered the “Farmers Smart Plan Auto” (FSPA) to new customers while hiding the plan to current and loyal customers that were stuck in plans that charged significantly higher premiums.

            In the years leading up to 2016, Farmers saw a significant decline in business and market share with respect to its auto insurance products, including in the Texas market.  This decline in business naturally led to a decline in revenue for Farmers.  In an attempt to reverse these revenue losses, in early 2016, Farmers introduced FSPA, which Farmers believed would bring in new business due to the plan’s significantly lower premium rates for the same coverage found in their existing FA2 plan.

            Rather than make the FSPA policies and lower rates available to FA2 customers, Farmers took several aggressive, deliberate, and highly deceptive steps to ensure that only new customers in Texas would be made aware of FSPA policies.  Further, Farmers took steps to ensure that FSPA would be hidden from existing FA2 policyholders and that they would continue paying higher rates.

            In nearly all cases, the premium rate than an existing FA2 policyholder pays is higher than a new customer would pay under FSPA for nearly identical coverage.  The rate difference between FA2 and FSPA can be as high as 24-40%, or even higher.  By switching from FA2 to FSPA, families may potentially save more than $1,000 for every six-month policy period.

            One plaintiff in this lawsuit, Charles Grigson, is a resident of Travis County, Texas and has been a Farmers Texas auto policyholder since 1981.  On January 4, 2016, Grigson was insured through two FA2 policies from Farmers Texas.  In early May 2016, he learned of the existence of FSPA and the potential for lower auto insurance rates.  He contacted Farmers’ customer service line on May 19, 2016 and the representative told him to speak directly to his agent.  On May 26, 2016, his agent, Shelley Adam, retrieved a side-by-side comparison of his current FA2 premiums and coverages and a quote for FSPA premiums and coverage.  With identical coverage, his FA2 premium was $3,053 and his FSPA quote was $2,440.60.  Farmers made arrangements for FSPA to be available to Grigson after this conversation, but he was still economically damaged from January to May 2016.

            Based on the facts of the case, the plaintiffs allege a violation of Texas Insurance Code § 544.052.

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