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Study: Luxury cars qualify for farm-use discounts

John Egan

Luxury cars like the BMW Z4, Cadillac XLR, Jaguar XJ6, Mercedes SL550 and Porsche Carrera — vehicles that normally aren’t used to haul hay — are gaining farm-use discounts from car insurance companies in urban settings like Houston, San Francisco and Scottsdale, Ariz., according to a new study.

Many car insurers offer farm-use discounts of up to 20 percent to policyholders who use their vehicles exclusively on a farm, where the chances of a crash, theft or other mishap are much lower than in urban areas, according to insurance analytics company Quality Planning. However, car insurance companies lack a rock-solid method for determining whether a policyholder truly lives on a farm.

“Misapplication of the farm-use discount is one of a number of frauds perpetrated on insurance companies by dishonest policyholders and their agents,” Robert U’Ren, senior vice president of Quality Planning, says in a statement. U’Ren says that “in a very real sense, our farmers are subsidizing unscrupulous city dwellers.”

Quality Planning, which verifies policyholder data for car insurance companies, chose about 80,000 vehicles that received a farm-use discount in 2010 and examined the “garaging” address of each. Quality Planning then figured out whether the immediate area was urban or rural and whether anyone was actively farming in that area.

Of the roughly 80,000 vehicles studied, about 8 percent were regularly parked in ZIP codes where less than 1 percent of the population is involved in farming.

“Since farm use is seldom verified, it is an easy tool that cheats can use to reduce the cost of auto insurance,” Quality Planning says.

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