No doubt you've seen the ads for Allstate's "accident forgiveness"
program, which prevents Allstate from increasing your premium if you have
an accident. Approximately 10% of Allstate's 1.5 million customers
in California purchased this additional coverage.
The Los Angeles Times reported last week that a consumer watchdog group
asked the California Department of Insurance to investigate Allstate's
"accident forgiveness" program, which they say is deceptive,
unfair, and unlawful because it surcharges customers up to 15% with the
promise that a future accident will not cause the customer's insurance
rates to go up.
Bloomberg Businessweek also reported: Allstate's accident forgiveness
program became "a cash cow for Allstate by charging customers more
than they should be paying under California’s good driver law,”
said Todd M. Foreman, in-house counsel for Consumer Watchdog. “Allstate
was receiving $20 million a year in extra premiums since it began selling
the program in California in 2008.”
Is it fair that Allstate's customers pay more now to avoid paying more
later? When the Department of Insurance decided to investigate, Allstate
discontinued the program rather than cooperate with the Department's
investigation. What is really behind Allstate's "accident forgiveness"
program and what is Allstate hiding?