BOSTON – Thousands of Massachusetts motorcycle owners will receive a total of $14.6 million in insurance refunds as a result of a settlement with Commerce Insurance Company after allegedly being overcharged on their policies, Attorney General Martha Coakley announced today.
The AG’s Office has now obtained a total of $57.4 million for consumers as a result of its four-year motorcycle insurance investigation. The investigation, which began with a single consumer complaint, has led to settlements with 19 insurance companies since 2010, and generated refunds on more than 150,000 Massachusetts policies. Today’s settlement with Commerce is the largest motorcycle settlement reached by the AG’s Office and will provide refunds to more than 40,000 policyholders. Commerce, which was acquired by MAPFRE in 2008, is presently the largest writer of automobile insurance in Massachusetts.
“Our extensive investigation into these insurance companies has resulted in the return millions of dollars to thousands of Massachusetts motorcycle owners,” AG Coakley said. “Identifying these troubling overcharges continues to underscore the need for transparency in auto insurance rating practices, and we are pleased to have facilitated refunds for consumers statewide.”
Under the terms of the settlement with Commerce, which was filed today in Suffolk Superior Court, Commerce will pay $14.6 million in refunds on over 40,000 insurance policies, and $325,000 to the Commonwealth. Later this month, Commerce will begin sending out refund checks ranging from less than $50 to more than $12,000 per consumer, with an average check around $360.
According to the settlement, Commerce allegedly overcharged certain customers between 2002 and 2011 by using inflated and un-depreciated motorcycle values to calculate insurance premiums. Although Commerce changed its business practices in 2005, in an effort to comply with required rating procedures, the AG’s investigation found that some overcharges occurred even after 2006.
All 19 motorcycle settlements stem from a consumer complaint that the AG’s Office received from the owner of a 1999 Harley-Davidson Road King Classic. In each year between 2003 and 2008, the consumer’s insurance company had calculated premiums for his motorcycle as if it were brand new, resulting in more than $1,500 in overcharges. After identifying this problem at one insurance company, the AG’s Office began investigating motorcycle rating practices across the Massachusetts auto insurance industry, and found the unlawful rating practice to be widespread.
In order to be eligible for a refund under one or more of AG Coakley’s settlements, consumers must have purchased Comprehensive, Collision, and/or Limited Collision coverage for a motorcycle during certain time periods (typically between 2002 and 2010), and their motorcycle must have been overvalued by their insurance company. Commerce policyholders will be able to determine their refund eligibility using the Attorney General’s Motorcycle Refund Lookup Application later this month.
Consumers who have questions about the settlements or their refunds may visit the Attorney General’s Motorcycle Insurance Settlements FAQ or call the Attorney General’s Insurance & Financial Services Division at 1-888-830-6277.
This matter was handled by Mathematician Burt Feinberg, Investigations Supervisor Arwen Thoman, and Glenn Kaplan, Chief of the Insurance & Financial Services Division.