Mercury Insurance Group violated state laws meant to regulate how coverage is priced and sold and, as a result, overcharged perhaps thousands of Californians for homeowner and automobile insurance, the state Department of Insurance said Monday.
The state’s fourth-largest auto insurer failed to ensure drivers were not charged more after accidents in which they were not at fault, and refused to cover bartenders, artists and others unless they met stricter underwriting standards than other customers, a state investigation alleges. Mercury could face fines of at least $5,000 for each violation under an enforcement action filed Friday, Insurance Commissioner Steve Poizner said.
Mercury spokesman Coby King said the company had not overcharged customers or violated the law.
The report comes at a time when Mercury is battling to rewrite some of the state’s insurance regulations through an initiative on the June ballot. The company spent $3.5 million backing Proposition 17, which would allow insurers to offer discounts to new customers who have no gaps in their previous insurance coverage.
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