Safeco required to disclose customers who have been surcharged for Auto Insurance


IS-00118666-001The Court of Appeal in Los Angeles California has passed judgment that Safeco Insurance Co, the Seattle based insurance company is now required to disclose information on which customers they surcharged for not having continual auto insurance. According to the proceedings between Safeco Insurance Company of America v/s The Superior Court of Los Angeles County, the plaintiffs have stated that surcharges that were not approved and disclosed were in violation of Proposition 103 which was approved in 1988 by California voters as the insurance regulation.

Consumer Watchdog invested in Safeco auto insurance application process in 2002, post which Consumer Watchdog sued Safeco insurance company for violating the California insurance code, section 1861.02(c). The code prohibits insurers from surcharging or refusing to insure vehicle owners due to the fact that they didn’t have insurance in the past. Furthermore it was also alleged that Safeco did not disclose its practices to the Insurance Commissioner, which is a violation of the law.

2004 saw a coalition made up of insurance companies and other businesses that funded a ballot measure. Proposition 64 as it was named was intended to curb frivolous law suits. Safeco in turn said that Consumer Watchdog should not be able to file the lawsuit on behalf of the public. A consumer volunteered to assist Consumer Watchdog; but was turned down by the trial court.

The present scenario is that a person insured by Safeco could not ascertain if he or she had been surcharged by Safeco. The Plaintiffs’ attorneys requested The Los Angeles Superior Court to regulate that Safeco has to provide a list of customer who they had surcharged so that they in turn could join in the litigation. Upon going through the evidence and internal documents provided by Safeco, The Los Angeles Superior Court Judge ruled that “What appears to be direct evidence, to the effect that the defendant had a surcharge policy based on a lack of prior insurance … This justifies allowing the discovery plaintiff seeks.” In the recent proceedings, The Court of Appeal rejected an appeal made by Safeco stating that the lower court order was fitting.

Harvey Rosenfield who authored Proposition 103 and attorney for the California based non profit organization, Consumer Watchdog said “This is an important victory for Safeco policyholders who paid hundreds of dollars more for auto insurance because Safeco knowingly broke the law and hid its lawbreaking from its customers and state regulators, Because Safeco concealed these surcharges, only Safeco knows who it overcharged, and this decision means that those people can have their day in court.”