State Farm Stuck With $34 Million Loss in Overcharging Suit

State Farm Life Insurance Co. failed to shake off a $34 million judgment in favor of a class of whole life policyholders who allege the company overcharged based on factors other than mortality, after the Eighth Circuit found the policy language is ambiguous and must be construed in favor of the customers.

The U.S. Court of Appeals for the Eighth Circuit upheld a trial court ruling that State Farm breached the contract with its policyholders by collecting “cost of insurance” fees based on factors not listed in the contract.

The contract states that the monthly COI rates rates for each ...