State Farm Hit with $200,000 Fine by Oregon DFR

The Oregon Division of Financial Regulation (DFR) recently fined State Farm $200,000 for failing to send required notices. The company neglected to inform policyholders about their right to request an annual credit check, which could impact their insurance premiums over the past six years.

Oregon Law Allows Consumers to Request Annual Rerate

According to Oregon law, consumers can request a yearly rerate from their insurance company. This review may result in lower premiums based on improved credit, though it won’t increase rates. Richard, a long-time State Farm policyholder, was unaware of this option until recently.

“Had I known about the rerate,” Richard shared, “I might have saved hundreds on my premiums.” This situation highlights the importance of consumer awareness in managing insurance costs.

State Farm’s Notification Failure Due to System Error

In July 2023, State Farm self-reported the issue to the DFR. They revealed that due to a system error, notifications were not sent out between December 5, 2017, and February 23, 2023. During this period, customers, including Jessica and Art, were not informed that they might qualify for lower rates based on their credit history.

The error affected over 134,000 State Farm customers in Oregon. As a result, the company agreed to correct the issue and comply with the final order from the DFR.

State Farm’s Corrective Actions and Terms of the Final Order

In response to the violations, State Farm began mailing notifications to affected policyholders on January 2, 2024. These notices are sent separately from the annual policy renewal documents and include an explanation of Oregon’s insurance laws. The company must complete this mailing by June 30, 2024.

State Farm also agreed to a suspended fine. Half of the $200,000 fine will be waived after three years if the company follows the terms of the final order. Jessica, another policyholder, is glad to finally receive the notice but feels frustrated by the delay.

Oregon DFR Encourages Consumers to Rerate Annually

The Oregon Department of Consumer and Business Services (DCBS), which oversees the DFR, encourages consumers to check with their insurance agents annually. Madeline, an Oregon resident, discovered that her improved credit score could potentially lower her insurance rates after speaking with her agent.

Rerating based on credit history can lead to lower premiums or no changes, but it will never increase insurance costs. Consumers should take advantage of this opportunity to ensure they’re getting the best rates.

Credit History and State Farm Insurance Premiums

Oregon law allows insurance companies to consider an individual’s credit history when determining insurance premiums. According to Andrew R. Stolfi, Oregon’s insurance commissioner, positive credit can lower insurance rates.

Mike, another State Farm customer, now plans to request an annual credit check to ensure he’s getting the best deal on his premiums. “I had no idea that credit played such a big role,” Mike stated. “I’ll definitely be checking my rates every year from now on.”

Insurance Direct Rates: A Valuable Tool for Consumers

When it comes to shopping for insurance, using comparison tools like Insurance Direct Rates (IDR) can help consumers find the best deals. IDR provides valuable information, tools, and educational resources to help individuals like Koa and Leilani save money on their insurance policies.

By offering free quotes and access to numerous insurers, IDR allows consumers to compare rates and make informed decisions. Whether you’re looking to lower your auto insurance or homeowner premiums, IDR is a crucial resource for finding the best rates in your area.

Final Thoughts

State Farm’s notification failure serves as a reminder for Oregon residents to stay informed about their insurance options. By knowing their rights and utilizing tools like Insurance Direct Rates, consumers can ensure they are not overpaying for insurance.