Settlement of Lawsuits With California Auto Club Affiliate Announced

The insurance affiliate of the Automobile Club of Southern California (the Interinsurance Exchange of the Automobile Club) will issue $22.5 million in refunds to approximately 120,000 policyholders to resolve lawsuits brought by The Proposition 103 Enforcement Project, a project of the non-profit Foundation for Taxpayer and Consumer Rights (FTCR), and Los Angeles resident Tracy Landers. According to the FTCR, the suits, filed in Los Angeles County Superior Court in January and September 2002 under the state’s Unfair Competition law, each alleged that the Exchange improperly surcharged previously uninsured drivers and others who could not demonstrate proof of prior insurance when they applied for coverage.

Under the terms of the settlement, the affected policyholders will receive refunds averaging $187, FTCR indicated.

FTCR believed the Exchange disagrees that it engaged in the alleged practice, and has asserted and continues to assert that it acted properly and within California law. Nevertheless, in the interest of avoiding added legal expense and protracted litigation, the Exchange decided to resolve the actions for the benefit of its policyholders. The company will also pay the legal fees and costs of bringing the suits.

“We are pleased that the Exchange has agreed to settle this lawsuit by providing refunds for these surcharges,” said consumer advocate Harvey Rosenfield, author of Proposition 103 and one of the attorneys representing FTCR.

Affected consumers — people who purchased auto insurance policies from the Exchange between April 1, 1999 and July 31, 2004 and were allegedly surcharged because they did not previously carry auto insurance — will receive information about the settlement by mail.

The Proposition 103 Enforcement Project and Ms. Landers were represented by FTCR attorneys Harvey Rosenfield, who authored Proposition 103, and Pamela Pressley, FTCR’s Litigation Director; Ted Pintar of the law firm of Coughlin Stoia Geller Rudman & Robbins LLP, and former Missouri Insurance Commissioner Jay Angoff.

Source: Foundation for Taxpayer and Consumer Rights