Minnesota Cracks Down On Auto Insurer For Charging Renters Higher Rates

1,600 Minnesota consumers get $315,000 in refunds

Minnesota Commerce Commissioner Mike Rothman announced that an investigation by his agency has resulted in an insurance company paying a $75,000 penalty and refunding $315,000 to more than 1,600 Minnesota drivers who were charged higher auto insurance rates solely because they were renters rather than homeowners.

"You should not be forced to buy a house in order to get a fair price on your auto insurance," said Rothman, whose department regulates the insurance industry in the state. "It is not only unfair, but in Minnesota it is also illegal for an insurance company to charge more or discriminate against drivers simply because they happen to rent their homes."

Minnesota law specifically prohibits companies from setting auto insurance rates or benefits, or denying coverage, based on a driver's status as a residential tenant. The Commerce Department's enforcement action is against Farmers Insurance Exchange, part of Farmers Insurance Group.

According to the consent order

A Commerce Department market examination of Farmers Insurance Exchange's pricing practices discovered that the company was using a driver's status as a residential tenant in offering or establishing its rates and discounts for auto insurance.

As a result of the Commerce Department inquiry, the company identified 1,620 Minnesota policyholders who were affected by this discriminatory pricing practice and it agreed to issue refunds and credits with interest to these policyholders, totaling $315,317.

In addition to the consumer refunds and $75,000 penalty, the company must cease and desist from violating the Minnesota law that prohibits charging higher rates to renters. The company has also agreed to end discriminatory discounts that favored policyholders who have both homeowners and auto coverage over policyholders who have both renters and auto coverage.

If you have a question or concern about your insurance, contact the Commerce Department's Consumer Services Center by email at consumer.protection@state.mn.us or by phone at 651-539-1600 or 800-657-3602 (Greater Minnesota).