I was shocked and amazed to today when, after writing the following letter to the California Department of Insurance to request assistance, Farmers called me and told me they were going to cover my claim.

July 14, 2005

STATE OF CALIFORNIA
DEPARTMENT OF INSURANCE
CONSUMER SERVICES AND MARKET CONDUCT DIVISION
CONSUMER SERVICES DIVISION
300 SOUTH SPRING ST, SOUTH TOWER
LOS ANGELES, CA 90013

To whom it may concern:

I would like to request your help in resolving a dispute I have with Farmers insurance regarding an interruption in my coverage that resulted in a denial of claim. I am at a loss to understand how when I converted my payment option to monthly, it changed the way it my coverage was applied. I find it an act of bad faith for an insurance company to collect premium for a period stated on a billing and then when presented with a claim the insurance company can cancel the policy; retain part of the premium and then refund the remaining premium. Then determine that you can not make a claim against the refunded premium.

Here’s the facts: On April 4 2005 I mailed a check to cover premium on two policies (XXXXXX auto, YYYYYY property) for billing period 4-11-05 to 5-10-05. (see copies). They stated, by their record, the check was received and the funds collected on 4-7-05. On 5-08-05 my car was burglarized in front of my house and property was stolen. WCPD was advised and created report #05-XYZ. This event was covered under the property policy. I called Farmers on 05-08-05 to inform them of the event, I was assured coverage was in place and given a claim number #0000000000 and asked to follow up during the business week, as the 8th was a Sunday. On Tuesday the 10th when I called to determine the procedure to complete my claim, I was informed that there may be a problem and that a fact finding was beginning and I should call back. That same day I checked online and made a payment again that was accepted. On the 11th I was asked to make a recorded statement and given no status on the coverage or claim and told that an administrative decision would be forthcoming. Still on the 11th, Farmers (see post mark) sent a letter of cancellation and refund of premium back to 4-26-05 that was apparently back dated to 5-09-05. (see copies) On 5-16-05 they sent me a letter explaining my current status (see copies). During this timeline, Farmers sent me a notice of cancellation dated 4-04-05 for a cancellation date of 4-26-05. But, since on 4-05-05 I had sent a premium for a coverage period to 5-10-05 that had crossed in the mail and there had been no refund of premium, I thought the accounting would work itself out and was confident I retained coverage. Until after a claim was made, when they determined somehow by contract that my payment timeline deserved cancellation. I did not write that contract and I haven’t read it. However, I did read my billing statement that said I was paying for billing period 4-11 to 5-10 and they collected the premium on 4-07 and received premium again on 5-10. Yet, somehow I was unpaid and had an interruption in coverage even when they retain part of the premium collected and refund the remainder as if the collected money was worthless.

It amazes me that an insurance company is allowed to treat the basic principle of insurance premium collection with such disregard. It is further galling to have them back date and send documents to some how bolster their position or lessen the sting of their actions.

I am a consumer that feels I have been treated unfairly. The claim amounts to approximately two thousand dollars and nobody was hurt, there were no medical expenses. However, what if this had been an auto accident on the 8th and there were medical expenses and pain endured? It would have been a travesty! My policies have been changed back to non-monthly payments where I understand the billing principles. After almost 14 years with Farmers, and under various policies, monthly billing was started because of my personal financial difficulties. This is absolutely frightening considering that those making monthly payments are most likely to be disadvantaged and then they are abused by practices of a giant insurance company.

I request that STATE OF CALIFORNIA, DEPARTMENT OF INSURANCE review my claim and also investigate the practices of Farmers Insurance with regard to their monthly billing.

Sincerely,

cc: Garamendi

Enclosures: