Allstate Removes Car Insurance Product from Calif. Market

After coming under heavy criticism from a consumer group, Allstate car insurance will cease issuing new policies with Your Choice Auto options that offered discount opportunities and rewards for safe drivers in California.

The department of insurance first approved the Your Choice Auto program in 2008, but the group Consumer Watchdog questioned the legality of the program and sought its removal from the marketplace, with representatives from the group alleging the program was nothing more than a “cash cow” that “led good drivers to vastly overpay for insurance.”

Sign in front of Allstate corporate headquarters

Photo Courtesy of Allstate

Components of the Your Choice program included accident forgiveness, safe driving bonuses, deductible rewards and new car replacement.

“The program costs consumers more while cutting deductibles the longer a driver goes without a claim,” Bloomberg News reported. “It also allows a policyholder to report an accident without it affecting rates.”

In California, however, some policyholders could still have their premium prices affected by an at-fault accident through the loss of their 20-percent good driver discounts even if they were enrolled in accident forgiveness, which was one aspect of the Your Choice Auto options.

All California drivers who have been licensed for at least three consecutive years and have no more than one point on a driving record are entitled to premiums that are at least 20 percent lower than motorists who do not meet this criteria.

According to Consumer Watchdog, Allstate currently has approximately 150,000 policies in place in the state that include Your Choice Auto. Consumer Watchdog also says that Allstate collected an estimated $20 million a year in “extra premiums” since it introduced the program to the Golden State and that all of the policies will be phased out by November 2011.

Allstate representatives did not return Online Auto Insurance News’s requests for comment on the decision to remove the product from the Calif. market.

In 2009 — the latest year for which data is available —  Allstate had the third largest share of the California auto insurance market with more than $1.66 billion in premiums written in the state.

The coverage provider wrote approximately 8.7 percent of the total private passenger car insurance premiums in place in the state that year.

About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

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