Colorado’s Division of Insurance has completed a market conduct examination of Esurance, a licensed and Colorado-regulated insurance company based in California and fined it $147,000 for violations that affect consumers. The company also is being surcharged $7,500, which goes to the DORA outreach fund toward consumer education.
In its market conduct examination, the DOI said Esurance did not adequately provide notice to consumers of their right to protest certain actions, including a premium increase, nonrenewal, or cancellation of their policy. These issues include:
- Failure to offer to exclude a specific driver and to disclose the modified premium that would result from this exclusion. (Excluding a high-risk driver can prevent a premium increase, nonrenewal or cancellation of the household policy.)
- Failure to provide the reason for one of these specific actions.
- Missing information on the premium increase notices, including notice requirements for both the Fair Credit Reporting Act and the policyholder’s right to replace the insurance through an assigned risk plan.
The “failure to offer to exclude a specific driver” violation relates to Colorado law that allows policyholders to exclude a member of the household from an automobile coverage insurance policy, the DOI explained. The insurance company must notify their policyholder when the driving history or other risk factor for one household member prompts a higher rating for the entire household policy.
The owner of the policy must be informed of the option of paying a lower insurance premium if driver who is considered high risk due to driving history or other factor is excluded from driving under the policy.
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