SAN FRANCISCO (KCBS RADIO) – A California insurance commissioner is alleging that the sixth-largest auto insurance provider in the state has illegally steered drivers to pay more for insurance.
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Insurance Commissioner Ricardo Lara on Monday announced a major legal action against Mercury Insurance for the violation of consumer protection laws. According to Lara, Mercury Insurance sold its highest-priced policy to "good drivers" instead of the lowest-priced policy, which they qualified for under California's Proposition 103 that mandates a 20% discount for consumers who keep a safe driving record.
"Failing to sell good drivers the lowest priced policy for which they qualify is illegal, and my Department will act on behalf of consumers and pursue the maximum penalties against Mercury for acting in bad faith," said Lara.
Mercury Insurance has two companies in California: Mercury Insurance Company and California Automobile Insurance Company.
Lara alleged that through CAIC, Mercury charges higher rates for nearly identical coverage as MIC.
Following an investigation, the California Department of Insurance also accused Mercury of overcharging businesses and homeowners in other lines of insurance that resulted in unfair discriminatory rates. For example, Mercury allegedly increased premiums for commercial drivers who had been in an accident where they were not at fault.
The action comes after Mercury Insurance was fined $27.5 million by the state of California in August, 2019 for charging its customers illegal fees.
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