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Complaint 11 of 36 in "Claim Denied or Delayed"

Insurance Carrier: Farmers Insurance
State: Minnesota

Consumer Complaint:

I recently purchased a new car at which time I paid $525 for auto insurance on Oct. 16, 2008. My understanding was this payment was for coverage on this new vehicle. I also had another vehicle covered by the same insurance company which I let the insurance expire because I no longer owned this vehicle. On December 23, 2008 I was in an auto accident in my new vehicle and when I called my agent to report the accident my agent told me that $200.00 of my $525.00 payment for my new car went on my old car, the one with the expired policy. I was not renewing my old policy but starting a new one and my agent did not inform me they were applying part of my payment towards the vehicle with the expired policy. I did not get this information until I called to report an accident and was then informed that I was no longer covered. This I do not understand; it appears that I am being forced to pay insurance for a vehicle I no longer own or had an active policy on. My insurance company has abandoned me without any coverage. Even if they did take $200 from my payment one would think that $300 would at least provide coverage for 3 months, at that rate my annual coverage would be $1200 which is what a high risk driver would pay. Now I am going to court over this because my insurance company, Farmers will not cover the accident. Please advise me what can I do in this situation.


Insurance Expert Answer:

First, make sure you defend the claim. Second, if you had coverage at the time of the accident or not is a factual issue, that would take someone looking into all the issues, including how you asked them to remove the old car, whether there was any "short rate" penalty (normally there isn't if you transfer coverage to a new car), what notices they gave you, what happened to any refund and when, the timing, etc. Normally the company would also tender a defense under a "reservation of rights," so even if it disclaimed liability it would protect its own interest should coverage later be determined to have been in effect. While we are not MN lawyers, it sounds to me as if you should have coverage. Do you have a lawyer to defend you? A letter from the lawyer to the insurance company might do wonders.