Consumer advocates warned Thursday that a legal victory by the Automobile Club of Southern California could spur other insurers to charge customers steep fees for paying their bills in installments, the Los Angeles Times reports.

The issue, the subject of several lawsuits, has prompted a bill in the state Legislature and has come under scrutiny from the California Department of Insurance.

Critics say the installment fees are sometimes not fully disclosed to policyholders until they get a first bill. The Auto Club charges the highest installment fees, an amount that could increase the cost of a $2,000 annual premium by more than $100.

The Auto Club’s fees run as high as 18% of a policyholder’s unpaid balance. State Farm Mutual Auto Insurance Co., Farmers Insurance Group and other major insurers charge more modest, flat fees. USAA, the state’s ninth-largest auto insurer, collects no fees from policyholders who pay in installments.

On Wednesday, the Auto Club prevailed in a challenge to its installment fee plan when the California Supreme Court refused a plaintiffs’ petition to review an appeals court decision.

The 4th District Court of Appeals ruled in March that the Auto Club’s installment fees represented “the time value of money” and were not premiums subject to regulation by the Department of Insurance. Rather, the fees compensated the insurer for income it would have received if the customer had paid a lump sum and the insurer had been able to use or invest that money.

Read the full L.A. Times story

.(registration required)