Class Action Suit Alleges Chubb Misleads Consumers With Home Premium Discounts

By | January 12, 2023
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Insurer Chubb is being accused of misleading consumers in the way it offers insurance premium discounts to homeowners as percentages without specifying the actual dollar amounts that insureds can save, and allegedly not applying all of the promised discounts.

A California customer of Chubb has filed a proposed class action suit in federal court in New Jersey alleging violations of that state’s consumer fraud act and unjust enrichment.

Plaintiff Gilbert Purcell alleges that Chubb subsidiary Federal Insurance did not apply all of the promised discounts to the undiscounted $60,078 premium for his Chubb Masterpiece homeowners insurance policy renewal. Purcell claims he was told that the aggregate discounted price of the policy was $35,849 after receiving the various discounts. However, he maintains that had Chubb applied the discounts at the percentages promised, his renewal premium would have cost no more than $30,616, and possibly even less, as opposed to $35,849.

Specifically, according to the complaint, the renewal offer listed discounts by the following percentage amounts, in addition to other discounts not associated with any percentage amount:

  • 14% “for taking steps toward superior protection”
  • 10% “because you also insure your automobile(s) with Chubb”
  • 10% “since your owned residence has no mortgage or lien”
  • 10% “for having a residential sprinkler system”
  • 7.5% “because you also insure your valuable articles with Chubb”
  • 7.5% “for being a long-time customer along with your loss history” and
  • 5% “for personally paying your premium in full, in one initial payment, at least once in the past five years.”

According to the complaint, the renewal neither gave the dollar amounts by which each discount reduced the price nor gave any other indication how these percentage discounts were applied.

Purcell says he sought clarification from Chubb through his insurance agent but “after repeated communications with Chubb, the agent did not know, and could not explain, the pricing and discount application.”

Purcell states he paid the $35,849 premium as presented on the advice of his agent in order to avoid a lapse in insurance coverage, while his agent continued to communicate with Chubb regarding the actual dollar value of the discounts. Purcell claims he expected to be refunded any overpayment but Chubb never provided any explanation or clarity. According to the court document, Purcell has insured his home with Chubb since 2011.

The complaint alleges that the dealings were misleading in that either the undiscounted premium values Chubb offered were higher than they actually were, or Chubb promised discounts that it did not in fact apply to the undiscounted premiums, or both.

“Such conduct constituted unlawful, unfair, and fraudulent business practices. These practices were likely to deceive a reasonable consumer,” the complaint concludes, citing New Jersey’s consumer fraud act.

The complaint further criticizes Chubb for allegedly not providing a complete copy of the entire policy at renewal, sending only “a scattershot gathering of non-consecutively paginated documents.”

The suit does not name Purcell’s insurance agent.

The suit seeks class action status for other Chubb homeowners’ insurance customers. It also seeks compensatory damages and a requirement that Chubb provide “full complete policies with all renewals, consecutively and comprehensively paginated, including a calculation of discounts applied, unless a customer opts out of such provision.”

Chubb had not commented by press time.

Topics Lawsuits Chubb

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Latest Comments

  • January 16, 2023 at 8:14 am
    Mike from Jersey says:
    The only part of this that I find worrisome (if it's true) is that he says he asked to know what the actual dollar amounts of the different discounts were. If I were the agen... read more
  • January 14, 2023 at 2:38 pm
    Actuary says:
    Coming up with a dollar amount for each discount is often pretty arbitrary. Most rating plans are the product of a bunch of factors times a base rate. Depending on where you d... read more
  • January 14, 2023 at 1:13 pm
    Observor says:
    More sophisticated rating plans often make specific discounts difficult to calculate. What matters at the end is what is the final price, The consumer can then compare the pri... read more

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