California Regulator Shuts Down Vehicle Warranty Company

California Insurance Commissioner Steve Poizner has filed a cease and desist order against two individuals and a company they own for purportedly selling insurance disguised as “auto additive warranties” without a license. Laurie Cosentino and Robert Konzen, co-owners and directors of Prestige Administration Inc., d.b.a. Autolife Rx, each face a fine of $5,000 for every day they conducted business in California, or five times the revenue received from California consumers, whichever is greater. This is the second cease and desist order filed in the past 30 days against a company for allegedly selling insurance under the guise of a warranty, according to the Department of Insurance.

The Department of Insurance alleges that Prestige Administration Inc., headquartered in Phoenix, unbeknownst to the Department, acted as an unlicensed insurance company, providing mechanical breakdown insurance since early 2008. CDI alleges that company sold the insurance policies through car dealerships. The dealerships offered the policies to consumers who purchased vehicles.

In June 2009, Prestige requested Department of Insurance permission to sell a radiator additive warranty. Such warranties may only be sold with Department approval. The Department refused to provide that approval and explained to Prestige that its so-called “warranties” failed to meet the legal requirements to be considered a true warranty. Additive warranties that the DOI does not approve are automatically deemed to be insurance policies, and may only be sold by licensed insurance companies with several million dollars in net assets that meet strict accounting and experience requirements, which Prestige did not meet.

The Department contends that Prestige, under the direction and control of Cosentino and Kozen, illegally sold insurance after the Department made it clear that its warranties were disapproved. The company allegedly intentionally disregarded the requirement for an insurance company license.

The Department’s pleading against Prestige can be found at

Source: CDI