Insurance cheaters call their luxury cars farm vehicles

Meet the newest crop of farm vehicles: Porsche Carrera, Mercedes SL550 and BMW Z4.

One wouldn’t expect to see such high-performance roadsters pulling tillers, hauling fertilizer or spraying pesticides between corn rows, but if you believe their owners, these expensive vehicles are working alongside the John Deeres and Caterpillars of the world.

It turns out that some drivers of these cars are perpetrating an insurance fraud — claiming them as farm equipment to harvest hefty discounts on insurance premiums. At least that’s the assessment of Quality Planning, a San Francisco company that verifies policyholder data for auto insurance companies.

Auto insurers offer farm-use discounts of up to 20% to people using their vehicles nearly exclusively on a farm, where the chances of a collision, theft, or other mishap befalling the auto are lower than in urban areas.


Quality Planning looked at 80,000 vehicles for which a farm-use insurance discount was claimed last year and used geocoding to determine whether the address where the cars were housed was an urban or rural area and whether anyone was actively engaged in farming there.

About 8%, or 6,382 vehicles, were housed in ZIP Codes where less than 1% of the population engaged in agriculture, based on U.S. census data.

Among the vehicles it found was an Audi A4 classified as a farm vehicle in Brooklyn, N.Y., giving the owner a $389 annual insurance savings. A Cadillac Seville in Los Angeles also was listed as a farm vehicle, but the annual savings was only $61.

“Honest people end up subsidizing the insurance premiums of dishonest people,” said Robert U’Ren, senior vice president of Quality Planning.


He said the improper application of the farm-use discount is a money-saving move that’s done by both dishonest policyholders and insurance agents. It results in about $150 million of unpaid premiums annually.

Because farm use is seldom verified, “it is an easy tool that cheats can use to reduce the cost of auto insurance,” U’Ren said.

For the most part, State Farm Insurance relies on its agents to verify auto classification, but on occasion has its underwriters use Google maps to check whether the address of a vehicle receiving the rural discount corresponds to ranch or farm land, said Bob Devereux, the insurer’s spokesman in California.

When State Farm discovers “misrepresentation,” it reclassifies the auto and charges the correct rate but doesn’t take any punitive action.


“We typically don’t file civil action against the client,” he said.

It’s no surprise that thousands of autos slip past the system to be classified as farm vehicles even though they are sports cars housed in cities, said Pete Moraga, spokesman for the Insurance Information Network of California, an industry trade group.

Some clients lie about how they are using a car, and some brokers cheat to cut premiums to win business, he said. “Every company is different and how much time they spend validating or underwriting is different, so that it is possible that a Porsche could get through as a farm vehicle,” Moraga said, adding that the auto insurance industry loses billions of dollars annually to frauds and misrepresentations.

He said there is some risk for people who falsely claim to be using a vehicle on a farm to win a discount. If they are in an accident and the insurer discovers the misrepresentation, the company might deny the claim.


“A policy will dictate that the information provided to the insurer is true, and the policy may be void if the information is incorrect,” he said.