AG Coakley Urges Passage of Bills to Provide Protections for Driver Against Auto Insurance Surcharges
Proposed Legislation Addresses Appeals of Motor Vehicle Accident Surcharges, Transparency in Auto Insurance Rating Plans
BOSTON – In an effort to implement greater protections and transparency for drivers who face motor vehicle insurance surcharges, Attorney General Martha Coakley is urging the Legislature to implement changes to the law that would prevent consumers from paying unwarranted costs.
In a letter to the Joint Committee on Financial Services, AG Coakley expressed support for two House bills that would ensure that drivers who are wrongfully determined to be at fault for auto accidents are not required to pay additional premiums, and a Senate bill requiring insurers to disclose certain surcharges and how drivers can take steps to eliminate them.
“All too often our office has found that insurers have failed to refund drivers who were overcharged when it comes to their auto insurance, revealing troubling defects in policy processing systems,” AG Coakley said. “In order to boost transparency and oversight, we urge the Committee to give these bills a favorable recommendation.”
House Bill 919, An Act Relative to Stay a Surcharge Pending Appeal, sponsored by Representative Anne Gobi, halts an insurer’s at-fault surcharge determination while it is being appealed to the state’s Board of Appeal. Currently, insurers are allowed to impose surcharges while consumers are waiting for their surcharge appeal hearings. If the Board of Appeal later vacates the surcharge, the insurer is required by law to refund the surcharge to the consumer, but the AG’s Office has found that many insurers have failed to provide consumers with appropriate refunds.
The AG’s Office began its investigation into auto insurance overcharges after receiving a complaint from a Met P&C customer whose surcharge had been vacated by the Board of Appeal in 2010. The investigation revealed that by 2012, Met P&C failed to refund the consumer more than $700 in surcharge premiums, which led to a settlement in January. In March, four auto insurance companies – The Premier Insurance Company of Massachusetts, Plymouth Rock Assurance Corporation, Pilgrim Insurance Company, and Massachusetts Homeland Insurance Company – settled with the AG’s Office over similar allegations. The carriers will collectively make payments to the Commonwealth totaling $170,000.
House Bill 848, An Act Relative to Motor Vehicle Insurance Surcharges, sponsored by Representative John Binienda, requires insurers to reimburse the consumer the amount overcharged, with interest, if the Board of Appeal overturns an at-fault determination. Both bills amend section 113 of chapter 175 of the General Laws.
Senate Bill 438, An Act Promoting the Transparency of Automobile Insurance Surcharges, sponsored by Senator Barry Finegold, requires insurers to publicly disclose their merit rating plans, list surchargeable events, as well as the circumstances under which surcharges may be removed or refunded. According to the letter, providing this information enables consumers to better compare companies and choose those companies which are likely to view their driving records most favorably.
The Senate bill also requires insurers to itemize the premium charges associated with each accident or violation on the policyholder’s driving record.
The AG’s Office is continuing to evaluate other auto insurance companies’ surcharge practices. Consumers who paid surcharge premium to a carrier that was not refunded or was not fully refunded after the surcharge was vacated by the Board of Appeal or otherwise eliminated should call the Attorney General’s Insurance & Financial Services Division at 1-888-830-6277.
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