Attorney General Martha Coakley Recovers Additional $12 Million in Motorcycle Insurance Overcharges for Massachusetts Consumers

BOSTON - Today, Attorney General Martha Coakley announced that she has reached settlements with five more auto insurance companies over allegations that they overcharged tens of thousands of Massachusetts residents for motorcycle insurance. Today's settlements, which will return $12.1 million to consumers, center around allegations that Arbella Mutual Insurance Company, Hanover Insurance Group, OneBeacon Insurance (aka Massachusetts Homeland), National Grange Mutual (NGM), and Norfolk & Dedham Group (N&D) used inflated and un-depreciated motorcycle values to calculate premiums for Massachusetts motorcycle riders, resulting in more than $12 million in overcharges. The Attorney General's Office reached similar settlements involving seven other insurance companies earlier this year. In total, the 12 insurance companies that have settled with the Attorney General's Office are paying back more than $33.8 million to Massachusetts residents and over $1.5 million to the state.

"We began our industry-wide investigation into motorcycle insurance based on a single consumer complaint. To date, that investigation has forced 12 insurance companies to return more than $33 million to Massachusetts motorcycle owners," said Attorney General Coakley. "As this investigation demonstrates, and as the insurance companies in this state know, when consumers bring complaints to our office, we listen and we take action."

Today's settlements stem from allegations that these insurance companies were illegally using inflated motorcycle values to calculate premiums and failing to depreciate motorcycle values as policies renewed. For example, the couple from Lynnfield that filed a complaint with our office owned a 1999 Harley Davidson Road King Classic. In each year between 2003 and 2008, our office found that Safety Insurance Company had charged the couple premiums as if their 1999 Road King Classic were worth $20,000. However, by 2008, the couple's motorcycle was nine-years-old and worth less than $12,000. As a result, Safety overcharged the couple by more than $1,500. For more information about how the overcharges occurred, including charts depicting the overcharges, visit www.mass.gov/ago/motorcycles.

Under the terms of today's settlements, Arbella is required to pay $6.3 million to consumers, Hanover is required to pay $2.5 million to consumers, OneBeacon is required to pay $2.1 million to consumers, NGM is required to pay $645,679 to consumers, and N&D is required to pay $554,480 to consumers. The insurance companies are also required to make payments to the state that total over half a million dollars.

As a result of this industry-wide investigation, the Attorney General's Office has identified over 100,000 policies that are eligible for refunds under the settlements reached to date. Average refunds under the settlements are around $320. To date, exact refund amounts have been calculated for 96,656 policies. Of those policies, more than 18,500 policies are eligible for refunds over $500.

In order to be eligible for a refund under the settlements, consumers must have purchased collision and/or comprehensive coverage for their motorcycle and their motorcycle must have been overvalued by their insurance company. Consumers who purchased insurance from Arbella, Hanover, Safety Insurance, Plymouth Rock, N&D, OneBeacon (aka Massachusetts Homeland), Pilgrim Insurance, Metropolitan Property & Casualty, Liberty Mutual, or Quincy Mutual can check the Attorney General's Motorcycle Insurance Settlement Webpage to find out if they are eligible for a refund and how much they will receive. Refund checks are expected to be mailed by most carriers by the end of the fall; Liberty Mutual and Quincy Mutual completed the initial refund process earlier this year.

These cases were handled by Assistant Attorney General Glenn Kaplan, Chief of Attorney General Coakley's Insurance & Financial Services Division, Investigations Supervisor Arwen Thoman, Mathematician Burt Feinberg and Economist Bryan Lincoln also of Attorney General Coakley's Insurance and Financial Services Division. The original consumer complaint was handled by Rebecca Dutra, a mediator in Attorney General Coakley's Insurance & Financial Services Division.

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