Mercury Insurance Accused of $89 Million Auto Insurance Rate Hike

Mercury Insurance Group is seeking permission from the California Department of Insurance to raise auto insurance rates by $89 million. Simultaneously, the insurer is seeking to take part in a 2012 initiative to give discounts to drivers who never let their car insurance lapse, which Consumer Watchdog says is not a coincidence.

Mercury Insurance Accused of Overcharging

Mercury Insurance has not been a stranger to controversy over the past few years. In 2010, Mercury was accused of overcharging thousands of California customers by not just charging higher auto insurance rates, but also delaying coverage, unfairly raising premiums and collecting premiums higher than allowed by law, according to the state insurance commissioner.

Now, the company is asking for formal permission to increase car insurance rates by $89 million, according to Consumer Watchdog. In a proposal to the Department of Insurance, the company is proposing to increase auto insurance rates of nearly two million customers by 6 percent.

Higher Auto Insurance Rates May be a Result of Campaign Costs

In a recent press release from Consumer Watchdog, Mercury Insurance is being accused of wanting to increase its rates to pay for lobbying costs needed in support of a controversial ballot initiative.

In 2010, the company was noted for strongly supporting a measure that would provide discounts to California drivers who carried auto insurance without dropping coverage. The measure, known as the Continuous Coverage Auto Insurance Discount Act, would also severely penalize drivers who allowed their coverage to lapse.

California voters denied passage of the initiative in 2010; however, the auto insurance measure has resurfaced for the 2012 ballot. According to Consumer Watchdog, not only is Mercury Insurance supporting the act again, it is seeking to raise its rates to spend $8 million on the initiative.

Consumer Watchdog has filed a formal challenge to Mercury’s rate hike request with the California Department of Insurance, stating that Mercury is also attempting to illegally include campaign expenses for the failed 2010 measure. So far, no response to the challenge has been issued by the Department of Insurance.