How Farmers Got Its Name—Do You Have to Be a Farmer for This Insurance?
Farmers Insurance might have a specific name, but its market isn't at all specific. Here's how Farmers got its name.
Written by Hannah DeWitt
Reviewed by Kathleen Flear
Back in the 1920s, car insurance wasn't a necessity. Still, one company managed to offer insurance for motor vehicles and even give discounts to their clients.
A Los Angeles-based auto insurance company,
Farmers Insurance
, underwrote its first policy in 1928 for a 1925 Cadillac owned by an orange farmer in Santa Ana. The policy cost $45 and was to last for six months, but even then, that was a major discount given that car insurance
wasn't all that common back then. The policy fit with the company's business model and was the brainchild of John Tyler and Tom Leavey. So how did Farmers get its name, and do you have to be a farmer to acquire this insurance? Read on to find out.
How did Farmers get its name?
The insurance company's founders Leavey and Tyler met in 1922 when the latter moved to California. Tyler worked as a railroad construction worker in France and at a sash-and-door company in Minnesota. He met Leavey, who was an auditor-turned-insurance agent.
At the time, farmers throughout the country had founded their own insurance firms to get affordable policies, but the two founders had much bigger ideas.
Having grown up in the rural areas, the two believed that ranchers and farmers were an overlooked market in insurance, and those with better driving records deserved to get lower insurance premiums.
Leavey and Tyler then decided to start their own auto insurance company, Leavey coming up with the idea to offer a 40% discount on insurance to farmers.
In 1927, the duo received a loan from the Bank of America founder. The loan enabled them to start the company, opening their doors in 1928. Leavey and Tyler named the new company Farmers Automobile Inter-Insurance Exchange.
At the time of its opening, Farmers Insurance had four employees: Tyler and Leavey as the company president and vice president, a secretary, and a sales manager.
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Farmers now sells to more than just farmers
77 years after its founding,
Farmers Insurance
now sells insurance policies to more than Farmers and ranchers. In 2000, Farmers registered with the SEC as a broker-dealer and began offering variable insurance and mutual funds.The company has grown to include 20,000 employees and more than 17,000 agents countrywide, selling insurance policies ranging from automobile, life, and homeowners' insurances to individuals and small businesses.
According to
Web Archive
, Farmers is the third-largest underwriter of homeowners and auto insurance in the U.S.MORE: Mazda to Mitsubishi, How Car Companies Got Their Names
Farmers has had various lawsuits in the past
Farmers is no stranger to controversy. In 2005, the company came under fire when it refused to pay a claim on a car accident, saying the accident was caused intentionally. The state of Washington still ordered Farmers to settle the claim.
In 2007, the company was fined $3 million for failing to defend two limited income homomers from a negligence claim. The following year, the insurer had to pay $2.5 million for 'stonewalling' during negotiations and handling a claim in bad faith.
Farmers has also been sued by its employees severally for various reasons, including failing to pay its workers for overtime and gender discrimination.
MORE: A Bag of Fries Led to an Unusual Farmers Car Insurance Claim
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