State Farm Mutual Automobile Insurance Co. is bowing to California courts, and will use driver records instead of ZIP codes to set premiums.

The change by the state's largest automobile insurance company, which owns 12.8 percent of the state's market, will result in average premium cuts of about 8 percent for almost all of its 3 million California customers, The Los Angeles Times reported Thursday.

State Farm's action follows a series of legal defeats for the industry that, essentially, upheld the state's right to ban the use of ZIP codes in setting premiums.

Meanwhile, Farmers Insurance Group, California's second-largest insurer, said it also plans to abandon ZIP codes as a basis for setting premiums. Other insurers, like the Automobile Club of Southern California and USAA are expected to do likewise.