CALIFORNIA, (KTXL) — The California Department of Insurance began legal action against Mercury Insurance on Monday, alleging the company pushes “good drivers” away from lower insurance options that they qualify for.
The department said that an investigation found that private car owners, homeowners, commercial car owners and commercial multi-policy customers were being harmed by the company’s practices.
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“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 Insurance Commissioner Ricardo Lara.
“My message to Mercury and other insurance companies that try to evade the law is clear: unfair and illegal practices will not be tolerated and I will fight to ensure consumers get the discounts they are entitled to under the law.”
The department said that Mercury allegedly failed to follow California Proposition 103, which mandated a 20% “good driver discount” for drivers that have a safe driving record.
According to the department, Mercury runs two insurance companies, Mercury Insurance Company (MIC) and California Automobile Insurance Company (CAIC).
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MIC is exclusively for “good drivers” and charges lower rates, according to the department, and CAIC charges higher-rates for very similar coverage to MIC.
According to the department’s investigation, Mercury used the following tactics to get drivers to buy a higher-priced plan.
Mercury was also found during the course of the investigation to:
There were more than 20 allegations against Mercury in this case, according to case records.