Posted on 06 Oct 2011
Massachusetts Attorney General Martha Coakley announced settlements on Monday with three additional insurers -- Travelers, Fireman's Fund, and Electric Insurance -- for allegedly overcharing policyholders.
Fifteen insurance companies in total have now settled with Coakley and agreed to return close to $40 million to Massachusetts consumers, including more than $5.6 million in additional insurance refunds for Massachusetts motorcycle owners.
"We are pleased that our investigation, which began with a single consumer complaint, has resulted in the return of nearly $40 million to Massachusetts motorcycle owners," Coakley said. "We are very concerned that the auto insurers in this state were able to overcharge so many Massachusetts consumers on such a large scale."
Monday's three settlements resolve allegations that the insurance companies illegally overcharged state consumers for years by using un-depreciated and inflated motorcycle values to calculate insurance premiums. Coakley's office reached similar settlements with 12 other insurance companies last year.
As a part of the newest settlements, Premier Insurance Company of Massachusetts refund $5,000,386, American Automobile Insurance Company will refund $571,394 and Electric Insurance Company will return $123,882 to policyholders in the state.
The three insurance companies are also required to collectively send out more than 14,000 refund checks in late October, with an average refund of approximately $400. According to Coakley's office, 1,424 refund checks will be over $1,000, 2,031 refund checks will be between $501 and $1,000, 2,627 refund checks will be between $251 and $500, 3,579 refund checks will be between $100 and $250, and 4,488 refund checks will be under $100.
The 15 settlements stem from a consumer complaint filed with Coakley's office from a consumer who owned a 1999 Harley-Davidson Road King Classic. The consumer's premiums were allegedly calculated as if the motorcycle was brand new and worth $20,000, but by 2003, the four-year-old motorcycle was worth significantly less than its original $20,000 price. By 2008, the nine-year-old motorcycle was worth less than $12,000. Despite this, each year between 2003 and 2008, the consumer's insurance company allegedly used the inflated $20,000 value to rate the policy, resulting in more than $1,500 in overcharges.