State Farm Insurance announced today it is issuing refunds to approximately 27,300 automobile insurance policyholders in Ontario as a result of an error in the application of a New Business Discount that was introduced in 2000.

State Farm said it reported this error, and its plan to process the refunds to those affected, to the Financial Services Commission of Ontario.

The refund applies to customers who were eligible for the New Business Discount credit, but the credit was not applied. State Farm’s New Business Discount Credit constitutes a 5% discount on mandatory and collision coverage premiums.

State Farm said customers who are entitled to a refund will receive written notification in December 2005. Refunds including taxes and interest will be issued promptly and steps have been taken to correct the error. The average refund is approximately $115.

State Farm customers who receive a refund and require additional information should contact their State Farm agent. Any eligible former policyholders who cannot be contacted to receive their refund may contact any State Farm agent.

State Farm said it will donate any unclaimed amounts to the United Way.

“We sincerely regret this error and apologize to those policyholders affected,” said State Farm Senior VP, Bob Cooke, in a release

State Farm Insurance is the second largest auto insurer in Ontario and the fourth largest in Canada.