Safety Insurance to Refund $200k for Overcharging Mass. Drivers

The attorney general in Massachusetts announced a settlement Tuesday with Safety Insurance Company that includes $200,000 in refunds going to hundreds of auto policyholders who failed to get the premium reductions they were due as they gained more experience as drivers.

According to the attorney general’s office, the company overcharged policyholders, most of them in their teens or early 20s, when it failed to fully apply “mid-term class changes” that would have lowered their rates.

Teenagers and less-experienced drivers tend to start out with high rates because they are riskier for insurers to cover. Those inflated rates generally revert to average levels as a driver ages and builds up a clean driving record.

However, Safety in some cases completely failed to adjust rates for those policyholders as they gained more driving experience. In other cases, premium reductions were only partially applied.

The overcharges date back to April 2010, according to a copy of the complaint and ensuing settlement that Attorney General Martha Coakley’s office provided to Online Auto Insurance News.

The refunds will include six percent interest and be paid to policyholders this fall, with an additional $45,000 fine that goes to the state.

Impacted policyholders will also be re-rated, according to the agreement, which also requires that Safety keep records for at least five years to prove compliance. A final report on the case from the attorney general’s office will be filed by the end of September 2014.

The state attorney general’s office is opening a broader investigation into auto insurers to ensure that they “properly adjusted policyholder premiums as inexperienced drivers gained additional years of licensure,” according to the office.

“This is yet another example of an insurance company failing to calculate premiums correctly,” Coakley said in a statement. “While we are pleased that Safety agreed to refund the alleged overcharges, this case underscores the need for auto insurance transparency and oversight.”

According to Coakley, consumers have been refunded about $43 million in auto coverage-related overcharges stemming from more than 30 cases since she became state attorney general in 2007.

The division within Coakley’s office handling similar cases can be reached at 1-888-830-6277.

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for Patch.com and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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