Insurers to return $11.1m in cycle suit
Three Massachusetts insurance companies agreed to issue $11.1 million in refunds to settle allegations they overcharged customers for motorcycle insurance over the past eight years.
Massachusetts Attorney General Martha Coakley’s office accused the firms - Safety Insurance Co., Liberty Mutual Insurance Co., and Quincy Mutual Fire Insurance Co. - of basing premiums on inflated values for the vehicles, instead of using current book values.
For instance, one of the insurers calculated its premium for a 1999 Harley-Davidson Road King Classic from 2003 to 2008 based on the assumption the vehicle was worth $20,000. But Coakley’s office said the bike was never worth that much. By 2003, it said, the value had fallen to $12,000.
Under terms of the settlement, filed in Suffolk Superior Court, Safety Insurance agreed to refund $7.2 million to policyholders, Liberty Mutual promised to return $3.1 million, and Quincy Mutual said it would return $800,000. They also agreed to pay the state $510,000.
Tens of thousands of policies were allegedly affected, and the average refund will amount to about $300.
“We are pleased that Liberty, Quincy, and Safety cooperated with our investigation and worked closely with our office to reach settlements,’’ said Coakley. “However, it remains troubling that these overcharges occurred, and these cases certainly underscore the importance of transparency in auto insurance rating.’’