Consumers Refunded Rigged Auto Repair Claims
Refunds of $1 million to reach about 3,100 Texas policyholders in last two cases
AUSTIN - Texas Attorney General Greg Abbott today announced the last
two in a five-year series of settlements with various insurance
companies to give refunds to Texas policyholders who paid more out of
pocket on claims for auto repairs than their policies required.
State and County Mutual Fire Insurance Co.
agreed to pay $952,000, including interest, in refunds to about 2,900
policyholders who had auto repair claims from January 1996 through
February 2003. In November the Attorney General filed a settlement with
Maryland Casualty Co.,
which requires the company to make refunds totaling $53,000 to about
185 Texas policyholders who filed claims between January 1996 and
September 1999.
“Consumers who make valid claims following
traffic accidents expect to be treated fairly by insurance companies,”
Attorney General Abbott said. “They also deserve refunds from companies
that used deceptive means to take money from them through such schemes
as this.”
The companies, along with others in the industry,
engaged in a systematic, unlawful practice known as “betterment,” in
which they claimed the use of better or newer parts to repair the
vehicle increased its value. Companies then charged the amount of this
supposed “increased value” to the policyholders, thus reducing the
amount the company paid for the repairs. Policyholders were then forced
to make up the difference, in addition to their deductible, to the
repair shop.
Under the terms of the agreement announced today,
most eligible policyholders will automatically receive a check
reflecting the total amount of overcharges, plus interest, to customers
who had auto repair claims involving betterment. However, many
policyholders have not yet been identified, and these individuals must
submit a claim form to the settlement administrator. Any consumer who
believes he or she may be entitled to a refund should call
(817)-732-2111 (ext. 3025), or mail an inquiry to Robert Hudson, Claims
Administrator, c/o Wellington Financial Services Inc., P.O. Box 230,
Fort Worth, TX 76101.
Since 2000, the Attorney General has
settled 19 betterment case for an estimated $17.4 million in refunds,
alleging that insurance companies merely increased the value of the
replaced part, and not the entire vehicle. Texas law does not permit
such a charge or deduction, and auto insurance policies require that
the companies fully pay for the repair, less the deductible, even if
the parts used were better than the ones they replaced.
