One of the nation’s leading property/casualty insurance companies has agreed to pay a $95,000 fine and rebate more than $15,000 after allegations surfaced that it was shortchanging the victims of low-dollar vehicle accidents.
According to Montana Insurance Commissioner Monica J. Lindeen, Safeco Insurance Co. was paying both its own insurance customers and those who were involved in car collisions less than what they were owed.
The company argued that victims in the accidents were at least partially at fault, and therefore only deserved a portion of the insurance policy payments – a legal argument known as “comparative negligence.”
Comparative negligence is a legitimate doctrine and reason for an insurer to withhold payment; however, Safeco’s assertion of comparative negligence was not sound in many of the cases. In addition, Safeco was invoking the doctrine primarily in low-dollar accidents, which were not likely to be litigated by a private attorney.
The practice came to light after Lindeen had the state insurance department examine claims paid by Safeco over a 16-month period. Investigators discovered the company applied comparative negligence in multiple cases where accident data did not support the claim.
In some cases, the company didn’t even disclose to claimants or the insurance commissioner’s office tht they were withholding part of the insurance settlement.
Safeco agreed to pay the $95,000 fine as well as rebate more than $15,000 to 35 Montana residents who were shortchanged from legitimate insurance payments.
“We expect every insurance company, no matter how large, to follow Montana law and we’re pleased we could correct this situation for affected Montanans,” Lindeen said in a statement.
