Allstate Will Repay California Policyholders $30M

June 27, 2005

Allstate Insurance Company will pay $30 million to California auto and homeowner policyholders that were overcharged, according to the Los Angeles Times. Approximately 250,000 customers will receive refunds, while the company also agreed to pay a California Department of Insurance fine of $4 million.

Allstate has not admitted liability. Insurance Commissioner John Garamendi said in a statement that Allstate used a form of credit scoring and did not give appropriate discounts, thus violating California insurance laws. The company also reportedly did not charge the lowest premiums that consumers qualified for in auto and homeowners insurance.

Some customers will receive a refund check, and others will receive credit on future bills, Garamendi said.

Allstate also will review how it handles claims, which many policyholders complained about in the aftermath of the 2003 Southern California wildfires.

According to Garamendi, Allstate will do the following:

Review its processes for handling contents claims to address and resolve any processes that are duplicative;

Address and resolve any processes or procedures that may confuse customers by having multiple adjusters handle a particular file;

Make changes or enhancements to new business underwriting practices that will allow for an identifiable record of the basis upon which a home’s replacement cost estimate was made;

Change underwriting practices so that the replacement cost estimation program used in the homeowner business is the same program used for Allstate Landlord Property Policies;

Review those files related to the Southern California wildfires where Allstate or the CDI has received complaints regarding the Additional Living Expense; and

Proceed with mediations on those Southern California wildfire cases for which the CDI contends Allstate provided an agreement to mediate under the CDI’s voluntary mediation program.

Was this article valuable?

Here are more articles you may enjoy.