Allstate Will Repay Policyholders $30 Million

Looks like Allstate got nailed by the California Insurance Commissioner. Credit scoring is a hot topic in the insurance world. An explanation of why insurance companies do credit scoring would make an intersting post. I will tell you that it is not because they are afraid of not getting paid - the only thing the insurance company is afraid of is paying for an accident.

According to Insurance Journal:

Allstate Insurance Company will pay $30 million to California auto and homeowner policyholders that were overcharged, according to the Los Angeles Times. Approximately 250,000 customers will receive refunds, while the company also agreed to pay a California Department of Insurance fine of $4 million.

Allstate has not admitted liability. Insurance Commissioner John Garamendi said in a statement that Allstate used a form of credit scoring and did not give appropriate discounts, thus violating California insurance laws. The company also reportedly did not charge the lowest premiums that consumers qualified for in auto and homeowners insurance.

Some customers will receive a refund check, and others will receive credit on future bills, Garamendi said.