Profitable Farmers Insurance "Error" Has Been Going On for A Year And A Half Now

Susan in Wisconsin was charged an extra $10.30 last October, even though she’d already paid the next six months of her premium in full a month before. “I thought maybe I had misread my initial bill and paid the amount said to be due,” she writes. But then it happened again last month, so she began to investigate.

Here’s what happened the second time around (emphasis ours):

In March 2008, I received my car insurance premium for six months and again paid the bill in full prior to the date it was due. Subsequently, I received another bill for $11.20 a month later. This time I thought “what is going on here? There is no way I made an error in my check writing again”. I called my agent and discovered the following:

Their system is supposed to charge an additional 2% when people pay only the minimum due for the six month billing cycle which I believe is half. Unfortunately, their system has a glitch which automatically is charging all customers this additional fee even when paying in full by the date due. Although I am sure that many people catch this problem, I am also sure there are a ton of people who simply pay the extra amount with the assumption that they made an error (as I did the first time). Even worse is that this extra payment was somehow slipped into the financial abyss of the Farmers Insurance agency pocket and not applied to any future premiums. The agent wasn’t even sure if they would be able to refund the erroneously paid $10.30. The agent admitted that this problem has existed for more than a year and a half and that they haven’t been “able” to fix it yet. Sounds like a very lucrative mistake to me, and that lots of unsuspecting people are probably paying a “late fee” that they are not required to.

At what point does an error evolve into a tidy little scam on your customers? How about after you let it go on for a year and a half?

Comments

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  1. copious28 says:

    I think contacting your state insurance board and/or the attorney general is in order.

  2. Now, I had the same problem with GEICO when I had their auto insurance. I’d signed up to make payments instead of paying the entire bill at once. Due to a tax refund, I paid the entire bill. But GEICO dutifully billed me the processing and administrative fees every couple of months as if I was making payments. When I called GEICO, they refused to refund it. CSR said that was what I agreed to pay, so tough.

  3. donkeyjote says:

    I smell class action lawsuit…

  4. snoop-blog says:

    What happened to everybody’s followers? I use to have like 23 of them. I click on other names and nobody else has any either.

  5. blong81 says:

    To bad I didn’t think of this one. Maybe I’ll set up my own company and have errors once in a while. Or I could just have one and never fix it.

  6. Carencey says:

    Hmmm…one time I opted to finish off my car insurance payments for the year with the third installment rather than paying the fourth and forgot to deduct the $5 installment fee from the fourth payment…my co. (Erie) refunded it to me very quickly. For an insurance company, I kind of like them.

  7. MissPeacock says:

    @snoop-blog: I noticed this yesterday and freaked out a little bit. But when I realized that it wasn’t just me, I figured I should calm down. However, if you click on the name of someone you’re already following, the system realizes that you are still following them, even if no one’s avatar is showing up.

    Gawker commenting has been just AWFUL ever since the forum redesign a few months ago.

  8. balthisar says:

    AAA Michigan did something similar to me one time. I prepay an entire year at a time (cheaper that way). One August I got a different car, for which my annual premium would increase. Now because I was no longer 100% pre-paid, their billing system tried to tack on an additional $3 above the premium increase as a payment fee! It was the the only time I’d ever called my actual agent, and he dropped that fee in a second.

  9. jeff says:

    Its okay… its better when they add a car to your policy that I don’t own and they have no idea how it go there and it took me 3 days to get it removed.

  10. theblackdog says:

    Couldn’t this be considered mail fraud (wire fraud if you get electronic bills)?

    I smell a lawsuit as well.

  11. mythago says:

    Wouldn’t surprise me if there were a class action suit pending.

  12. bohemian says:

    Interesting. Our insurance company just sent us a random $80 bill. After wasting a bunch of time tracking down our agent, it was someone’s mistake they decided our house had an extra 900 sq feet than the county records.

    As for the Farmer’s little money making scheme. Call your AG and the Insurance board for your state. If an individual did this it would be fraud and they would go to jail.

  13. Clarkins says:

    This doesn’t suprise me at all. I was an adjuster for them years ago and this is just one of the ways they’re still trying to make up for a massive loss in the stock market back in 2000 I think it was.
    They got bought by some overseas company and are only trying to increase the bottom line for that company.
    Only one of the reasons I left them.
    Yes, call your state insurance commission and check to see if you live in a “good faith” state. You can raise all kinds of hell by saying “they’re not acting in good faith”.

  14. MyPetFly says:

    @blong81:

    How about a company whose business model is ONLY making mistakes? Think of it — no inventory, very little overhead.

  15. arl84 says:

    Yes you should definitely call the insurance commission, and maybe even the DA. 10 bucks may not be all that much to one person, but that really starts to add up, and that’s not cool. Especially because they wouldn’t be able to refund it to you!

  16. godlyfrog says:

    @MyPetFly: Oh, so you want to open a record company?

  17. Birki says:

    I also have Farmers Ins. and received a bill in April for around $12, even though I had paid the premium in full in February, as I do every year. Yet when I called, the explanation I got was that someone at Farmers had changed my zip code which triggered some “change of address” charge. In fact, the “bill” I received mentioned the change of address as the reason for the new charge. The funny thing is, the person at the local Farmers office acted puzzled over the whole thing and said I shouldn’t have been billed. And anyhow, there is no reason for a zip code change on my account at all. Now I wonder if other policyholders are getting hit with this bogus charge.

  18. MarcoJahoobies says:

    I had this happen to me in a slightly different way early this year
    (around Feb). Farmers billed me for 6 months, I paid in full on time, I
    got a 2nd bill for about $10. When I called, they claimed I had paid
    late — because their billing system thought my due date was a month
    earlier than the date on my bill! My agent got it fixed and I was told
    it was a ‘computer glitch,’ but it certainly sounds like more of the same.

  19. Smorgasbord says:

    Car insurance for 11.20 a month? I pay $430 for six months. Where do I get an application?

  20. JeromeBabbas says:

    I’m not so sure this is actually a system wide error that the article
    suggests it to be. I’ve been with Farmer’s for a couple years now, and I
    pay my auto insurance in full every 6 months, and I’ve never had any
    problems with getting charged these late fees. I think this is likely a
    fairly isolated case that the consumerist is (as is often the case) blowing
    way out of proportion.

  21. S-the-K says:

    Don’t think for a second that if the error had been to the customers’ benefit that the company would have fixed it immediately and then charged their customers for the amount they should have paid.

    But because the “error” was in the company’s benefit, there is no reason for them to do anything about it, much less refund the few customers who notice the “error”.

  22. PracticalMagic says:

    Something similar to this happened to me with Farmer’s a few years ago, only it was with homeowners ins. I’d paid for a full year. When the next premium came due a year later, they tried to charge me 134.00 for the previous year’s premium, stating that the premium was going up, and that I would have to pay the 134.00 or they would not renew my policy.

    I fought with them over this for about a week. I finally got fed up and called my state’s insurance comissioner. I also changed insurance companies. I never heard from Farmers again, and I check my credit reports periodically. It’s never shown up as not pd.

    I love the Attorney General’s office and the insurance comissioner. It keeps those jerks on their toes!

  23. blackmage439 says:

    Wow, I am in no way surprised now that Farmers screwed my friend.

    A Farmers customer hit my friend on the road; completely their fault. Farmers refused to give my friend jack for a rental car, and screwed her on the repair payments. She has hated the bastards ever since.