California Insurance Commissioner Steve Poizner announced this week that Mercury Insurance "may have illegally overcharged thousands of Californians for auto and homeowners insurance," according to a statement from his office.
An "examination" of the company found that it was sometimes raising rates on drivers who had accidents, even though the collisions weren't their fault, and that it was excluding some bartenders, liquor store owners, painters, cocktail waitress and waiters and artists from coverage.
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Mercury was quick to point out, however, that Poizner is seeking the Republican nomination for California governor. The company stated that "political interests" were at play in Monday afternoon's big announcement.
Even Poizner's own spokesman acknowledged that making such a big announcement about such violations was unusual. But Poizner's office argues that the company has repeated violations it had previously agreed to fix.
Mercury is the $3.5 million main backer of Prop. 17, a November ballot initiative that would allow transferable "loyalty discounts" for drivers who change carriers. But the rates would not apply to those who let their insurance lapse, therefore becoming a clever way to raise rates on some drivers, critics say.
Poizner's office stated that Mercury could face $5,000 fines for each violation it found.