Over the past year, numerous drivers in Maryland have filed complaints against
State Farm after the insurer increased auto insurance rates as a result of accidents that were not the fault of the policyholder, or for a single emergency road service claim.
State Farm is Maryland’s second largest private passenger car insurer, commanding about 20% of the state’s market share according to AM Best.
State regulators found some of the increases unfair, with several of them the result of one incident within the previous three years. State Farm has reversed some of the increases, revealing that consumer complaints can make a difference after all.
The Maryland Insurance Administration continues to investigate consumer complaints against the company.
In 2014, State Farm raised its rates by an average of 0.8% in Maryland, with the change first affecting those policies renewed in November 2014, according to Dave Phillips, spokesman for the company.
Maryland actually allows insurance companies to raise rates after not-at-fault accidents and emergency road service claims. Some insurers other than State Farm raise rates for not-at-fault accidents, but most do not. State Farm is the only one that charges higher rates based on road service claims, the Maryland Insurance Administration confirmed.
The state also allows insurers to base increases on incidents within the past three years, which means some customers were notified that their rates were increasing due to something that happened more than two years ago.
Insurance regulators found that State Farm’s letters, which were sent to customers informing them of the increases, did not elaborate more on the basis for the hikes.
“The use of the phrase ‘Emergency Road Service’ as the sole description of the claim is not clear and specific and does not satisfy the requirements of Maryland insurance law,” noted insurance investigator Cheryl Kouns.
In the period between December 2014 and February 2015, the Maryland Insurance Administration asked State Farm to refund money, with interest, to 782 customers whose rates had been increased. Additionally, the company voluntarily refunded another 3,046 increases and withdrew increases it had planned for 1,126 customers. The state rejected 1,616 additional complaints that were not filed in time.
State Farm has since turned to imposing increases on drivers renewing their policies, sending revised letters of notification with better descriptions and details explaining the rate increases.
State regulators continue to investigate the matter.
The insurer recently agreed to withdraw increases coming from not-at-fault claims on uninsured motorist coverage in Maryland. State Farm also agreed to stop raising rates based on not-at-fault incidents, which includes emergency road service claims.
