Oregon Division of Financial Regulation fines State Farm $200,000

Some Oregon customers of State Farm auto insurance could have been eligible for lower premiums but wouldn't have known to ask, based on the complaints behind a state penalty issued to the company last month.

The Oregon Division of Financial Regulation hit State Farm with a $200,000 penalty, saying the insurance provider had failed over a six-year period to notify customers that they were entitled to request a credit check each year and potentially qualify for lower premiums.

State Farm self-reported the violations to the division in July 2023, saying a system error led the company to not send related notifications to its customers. This failure affected customers purchasing new auto insurance policies between Dec. 5, 2017, and Feb. 23, 2023, according to Jason Horton, public information officer of Financial Regulation for the Department of Consumer and Business Services.

State law requires insurers to notify customers at the inception of their coverage that they may have received a lower rate if their credit history or credit factors were more favorable. The law also requires that insurers notify customers each year that they could request a new credit check and potentially receive better terms.

As part of the final order, State Farm committed to sending notices to all affected consumers — approximately 134,690 individuals — whose vehicles are still insured by the company. This separate mailing, initiated on Jan. 2, emphasizes the importance of consumer awareness regarding their rights under Oregon law.

Half of the fine could be suspended and waived in three years if State Farm adheres to all stipulations outlined in the final order. State Farm paid the other half, $100,000, when it agreed to the order, according to Horton.

He said no other insurer in Oregon has been fined under the statute in the last five years.

The DCBS encourages all consumers to consider requesting a new credit check if it might secure better terms on insurance plans.

“We commend State Farm for self-reporting this violation and taking steps to rectify the situation,” Andrew R. Stolfi, Oregon’s insurance commissioner and DCBS director, said in a written statement. “It is important that Oregon consumers know their rights. State law permits insurance companies to use an individual’s credit history to determine how much they pay for insurance, so it is critically important that consumers know they have the ability to lower their insurance premiums with positive credit.”

Customers with inquiries or complaints can contact a consumer advocate through the DFR via a toll-free number at 888-877-4894 or by email at dfr.insurancehelp@dcbs.oregon.gov.

Consumers can look at their credit reports each calendar year for free by accessing them online, by phone at 877-322-8228 (toll-free), or by completing and mailing the Annual Credit Report Request Form. If any errors are identified, consumers have the right to correct incomplete or inaccurate information with the credit reporting agent that provided the information, according to the DFR.

David DeMille is the news editor at The Register-Guard. Reach him at DDeMille@RegisterGuard.com

This article originally appeared on Register-Guard: Oregon fines State Farm $200,000 for violating notification rule