TEXAS AG, INSURERS SETTLE:

Texas Attorney General Greg Abbott announced court-approved settlements with two major auto insurers that he says will result in refund more than $3.4 million to Texas policyholders who paid more out of pocket on claims for auto repairs in certain years than their policies required. Pro-gressive County Mutual Insurance Co. agreed to pay $2.35 million, including interest, in refunds to about 11,000 policyholders who had repair claims from January 1996 through May 1999, according to the AG’s office. Old American County Mutual Fire Insurance Co. will pay refunds of $1.07 million to an estimated 4,500 policyholders. This refund period covers claims for vehicle repairs from January 1996 to September 2001. The companies, along with others in the industry, engaged in the unlawful practice known as “betterment,” in which they claimed that the use of better or newer parts to repair the vehicle increased its value. Companies then charged the amount of this supposed “increased value” to the policyholders, thus reducing the amount the company paid for the repairs. Policyholders were then forced to make up the difference, in addition to their deductible, to the repair shop. Under the terms of the agreement, the companies, which have stopped the practice, agreed not to engage in this practice and will refund the total amount of overcharges, plus interest, to customers who had auto repair claims involving betterment deductions in the periods described. Since 2000, the Texas Attorney General’s office has obtained betterment settlements with Home State County Mutual Insurance Co., Consumers County Mutual Insurance Co., Farmers, Texas Farm Bureau, Trinity, State Farm, Nationwide, USAA, Geico, Travelers, Safeco, Sentry, Liberty Mutual, Allstate and CNA for an estimated $16.4 million in total auto repair refunds to date. Two lawsuits, against State and County Mutual Insurance Co. and Maryland Casualty Insurance Co., are pending.

Topics Carriers Texas Auto