To date, more than $42 million dollars has been returned to motorcycle owners
The Attorney General has announced two more settlements in connection with its ongoing investigation into the overcharging of policyholders who own motorcycles. The latest Massachusetts insurance companies who have agreed to refund its motorcycle insurance policyholders are the Encompass Insurance Company of Massachusetts, an Allstate subsidiary, and the Amica Mutual Insurance Company.
Under the terms of the settlement filed in Suffolk Superior Court, Encompass will pay $2 million to consumers with Amica Mutual Insurance Company planning to return more than $800,000. the insurance companies, like 15 others in the Commonwealth, were alleged to have illegally overcharged its motorcycle policyholders via inflated and under-depreciated motorcycle values that were then used to calculate insurance premiums.
As part of the terms of the assurance of discontinuance, both carriers will be required to send out more than 10,000 refund checks before February 2013. The average refund check amount is estimated to be about $280. Both Encompass and Allstate will also pay a civil fine to the Commonwealth totaling $93,600.
Since 2010, the Attorney General’s office has settled with a total of 17 insurance companies garnering more than $42.8 million dollars in refunds to Massachusetts insureds.
“This investigation began with a single consumer complaint, and has now resulted in the return of $42.8 million to Massachusetts motorcycle owners,” AG Coakley said. “These cases underscore the need for transparent auto insurance rates. Consumers and regulators have the right to know how insurance companies are calculating premiums so that issues like these can be identified and addressed.”
The impetus for the Attorney General’s investigation into this matter began with a simple consumer complaint the AG office received from the owner of a 1999 Harley-Davidson Road King Classic.
In each year between 2003 and 2008, the consumer’s insurance company calculated the consumer’s premiums as if his 1999 Road King Classic were brand new and worth $20,000. By 2003, the consumer’s four-year-old motorcycle was worth significantly less than its original price, and by 2008, the nine-year old motorcycle was worth less than $12,000. Still, in each year between 2003 and 2008, the consumer’s insurance company used the inflated $20,000 value to rate his policy, resulting in more than $1,500 in overcharges.
Below is a chart the AG’s office compiled outlining the results of this effort thus, far.
