BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley announced $2.8 million in refunds Tuesday through settlements with two insurance companies that allegedly overcharged policyholders who owned motorcycles.
Encompass Insurance Company, an Allstate subsidiary, and Amica Mutual Insurance Company allegedly overcharged Massachusetts consumers illegally by using inflated and un-depreciated motorcycle values for the calculation of insurance premiums.
Under the terms of the assurances of discontinuance, Amica will pay more than $800,000 and Encompass will pay more than $2 million to policyholders. The two carriers must send out more than 10,000 refund checks before February and make civil payments of $93,600 to the state.
Since 2010, Coakley's office has reached similar settlements with 15 other insurance companies, returning more than $42.8 million in total to Massachusetts consumers.
"This investigation began with a single consumer complaint, and has now resulted in the return of $42.8 million to Massachusetts motorcycle owners," 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 17 motorcycle settlements stem from a complaint Coakley's office received from a consumer who owned a 1999 Harley-Davidson Road King Classic. The consumer's insurance company calculated the consumer's premiums as if the motorcycle were brand new and worth $20,000 between 2003 and 2008. The use of the inflated value resulted in more than $1,500 in overcharges.
Consumers who purchased collision or comprehensive insurance coverage for motorcycles on or after January 1, 2002, may be eligible for a refund if the motorcycle was overvalued by the insurance company when the company calculated premiums.