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State Farm must reduce homeowners insurance rates in California

Last month, a California judge ruled that State Farm must cut its premiums for homeowners, condo and renters insurance, but it is not known at this time if the company will have to issue refunds for property owners for alleged overpayments.

The state’s insurance commissioner had demanded that State Farm lower rates retroactively to July 2015 and provide refunds to policy holders under Proposition 103, an insurance law in the state that allows the insurance commissioner to review and reject bids for insurance rate increases.

State Farm proposed a rate increase earlier in 2016, which was denied by an administrative law judge, who also found that the current rates are too high.

How much of a refund could policy holders get?

According to the Los Angeles Times, about 1.7 million policy holders would be eligible for refunds, totaling about $100 million. This would mean about $60 per policy holder, on average.

However, State Farm is fighting the refund in court, and the judge last month ordered that the refunds will be put on hold until the lawsuit is resolved. In the lawsuit, State Farm challenges the insurance commissioner’s ability to lower rates retroactively.

Insurance companies are out to make money

This story is a good reminder that insurance companies are out to make a profit, just like any other business. That’s why so many policy holders end up frustrated by denied or undervalued claims. The insurance company does not look out for the best interests of policy holders; they look out for their own best interests.

Any time that a policy holder feels that they are being treated unfairly by their insurance company because of a property damage claim that was denied or undervalued, they should work with an attorney who can demand that the insurer uphold their end of the bargain.

As you can see, courts hold insurance companies to high expectations and do not let them get away with taking advantage of policy holders.

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