Allstate to Pay $34 million to settle CA overcharge
June 28, 2005
Allstate Corp. said Monday that it will pay $34 million to settle allegations by California regulators that it overcharged customers and improperly calculated rates.
The Northbrook-based insurer will split $30 million in restitution among 250,000 policies sold since 1999, spokesman Michael Trevino said. The remaining $4 million is a fine. Allstate did not admit wrongdoing.
California Insurance Commissioner John Garamendi alleged that Allstate improperly used credit histories when setting homeowners insurance prices, said Garamendi's spokesman, Norman Williams. He also said Allstate did not always provide clients the best available rate.
"This was a dispute over how to interpret the regulations," Trevino said. "Rather than drag out the dispute, we decided to resolve it."
Last year Allstate agreed to pay $3 million to settle Garamendi's allegations that the company improperly used credit reports to select auto insurance clients.