$1.4 million in refunds to be sent to California homeowners.

Farmers Insurance will be refunding $1.4 million to California homeowners for overcharging on homeowners insurance policy premiums. They will also be required to pay an additional $2 million in penalties.

Farmers Insurance claims that the overcharges were due to computer errors (yeah, right!), and thus they claim no wrongdoing.

The overcharges apparently resulted when low fire risk areas were classified as high fire risk areas instead. Sneaky, huh?

The State insurance probe also found that Farmers Insurance did not have proper guidelines in place to determine whether to renew a policyholder based on the numbers of times that person filed a claim. These guidelines are needed to prevent the so-called "use it and lose it" practice, where insurance policies are cancelled just because claims have been filed.

You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.