Overview of the State Farm Life Insurance Policy Overload Class Action:
- Who: State Farm is sued by a life insurance policyholder in New York
- Why: Plaintiff claims State Farm hid inappropriate charges in monthly life insurance expense deductions
- Or: New York Federal Court
State Farm charged owners of life insurance policies more than it should have in its monthly fees and hid the fact from consumers, according to a new class action lawsuit.
Plaintiff Kim Botte filed the class action lawsuit against State Farm Life Insurance Company on May 16 in federal court in New York, alleging violations of contracts and New York business laws.
Botte says that over several years, State Farm deducted an excessive amount of money from its life insurance trust money, in violation of the terms of its policy.
Botte says that on a monthly basis, State Farm makes a deduction from the value of the account.
The policy text explains that the monthly deduction is made up of three components: the cost of insurance, the monthly fee for all riders, and the monthly expense fee, which is $5.
The policy does not state that State Farm may include charges for expenses in the cost of insurance expenses, and State Farm has not disclosed to policyholders that it includes these expenses in the cost of insurance expenses, says Boot.
“Defendant is contractually obligated to deduct only those expenses explicitly identified and authorized by the terms of its life insurance policies,” she states.
“Despite the policy’s unambiguous language, which is a fully integrated agreement, Defendant deducts charges from Plaintiff’s Account Values and Proposed Class in excess of the amounts specifically permitted by their policies.”
Plaintiff seeks damages for New York customers
Botte says State Farm improperly drained accumulated funds from their police accounts.
“Every unauthorized dollar taken from policy owners is one less dollar that policy owners earn interest on and one less dollar that policy owners can use for their own benefit.”
She seeks to represent a class of people who own or had a State Farm universal life insurance policy issued on Form 94030 in New York.
She seeks certification of the class action, damages, fees, costs and a jury trial.
In 2021, State Farm was ordered to pay 4.5 million dollars in the prejudgment interests of policyholders who allege the insurer overcharged them on life insurance policies after the Eighth Circuit ruled in favor of consumers for the second time.
What do you think of the allegations against State Farm in this case? Let us know in the comments!
Plaintiff is represented by Joshua D. Arisohn of Bursor & Fisher, PA
the State Farm Overcharge Life Insurance Class Action Lawsuit is Kim Botte v State Farm Life Insurance Company, Case No. 2:22-cv-02842 in the U.S. District Court for the Eastern District of New York.
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