Safeco Fined, Issues Refunds After Failure to Give Proper Discounts

More than 64,750 Safeco policyholders in California didn’t get the discounts on auto insurance coverage that they deserved, according to the insurer, which reported the figure to the state’s insurance regulator in an investigation.

The California Department of Insurance (CDI) said Friday that it fined Safeco $900,000 and ordered the insurer to refund about $3.1 million to drivers after a “routine exam” uncovered policy violations in 2006 and 2007.

“This case is a prime example of why market conduct exams are an important tool in insurance regulation,” CDI commissioner David Jones said in a statement. “When we find that insurers are not complying with the law, we are able to take appropriate action and protect consumers.”

The refunds were ordered because investigators found that Safeco was “inconsistently applying” discounts for motorists with good driving records as well as motorists who drove certain four-door vehicles, according to the CDI.

In a sampling of 100 in-force policies that had at least one vehicle eligible for the discount, the CDI said its investigation found that Safeco failed to apply the discount on 68 of those policies. It would have been a two-percent discount, according to the CDI.

Ultimately, Safeco reported to the CDI that it “failed to give the discount” to a total of 64,755 vehicles.

The fines also stem from other Safeco violations, including the insurer’s failure to use official reports from the California Department of Motor Vehicles to determine if an applicant should get a “good driver discount.”

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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