Rental car fees subject of insurance lawsuit

A federal class-action lawsuit was filed against State Farm’s Mutual Automobile Insurance Company on Wednesday. The lawsuit charges the Insurance Company with unlawfully profiting from rental car payments which belong instead to the company’s customers.

Stuart Chandler, from Fresno, is the lead plaintiff in the case. According to papers submitted to the court for the case, he was rear-ended in March last year, while driving a 2004 Acura.

His car insurance policy entitled him to a rental car while his vehicle was being repaired. State Farm covered 80 per cent of the costs of the rental, leaving 20 per cent, or $63.49, to be paid out of Chandler’s pocket.

When State Farm collected fees from the other driver’s insurance company, however, they collect 100 per cent of the rental costs, according to the lawsuit’s documents.

According to the lawsuit, the insurance company violated California’s laws. Stephen Garcia, Chandler’s attorney for the case, said: “California common law provides that when a policyholder suffers a loss from a car accident, the policyholder must be reimbursed for all of his losses before State Farm has a right to reimbursement for any money it paid out under its policy.”

State Farm kept the $63.49 and failed to compensate Chandler fully for his expenses, according to the lawsuit. The lawsuit also claims that other customers of the company have experienced similar losses.

State Farm did not comment on the lawsuit.