Suit: Car insurers cheating singles

Six insurance companies are accused of routinely charging owners of one car for collision coverage that is useless to them.

By JEFF HARRINGTON, Times Staff Writer
© St. Petersburg Times
published August 28, 2002

A half-dozen auto insurance companies in Florida are being sued for allegedly overcharging customers for coverage against collisions with uninsured motorists.

The six related lawsuits filed Monday in Pinellas County focus on customers who insure a single vehicle. Some insurance companies routinely charge such customers for "stacked" coverage designed for multiple-vehicle owners instead of less-expensive "unstacked" coverage, the suits charge.

With stacked coverage, motorists can multiply their coverage limits by the number of vehicles they have insured. Buying the more expensive stacked coverage makes no sense for someone with a single vehicle, the plaintiffs say.

"We don't agree the agents should be selling (stacked coverage), especially not to people that are getting absolutely no benefit from it," said St. Petersburg lawyer Bill Saron, one of several attorneys filing suit.

Typically, Saron said, someone paying annual premiums of $100 or more for stacked insurance could cut those premiums in half by paying for unstacked.

Saron and his associates allege the practice is not only abusive but commonplace, with thousands of policyholders statewide overcharged by millions of dollars during the last several years.

The attorneys are seeking class-action status.

Named as defendants in the suits are Allstate Indemnity Company, First Floridian Auto and Home Insurance Company (a subsidiary of Travelers), Geico, Nationwide Mutual Fire Insurance Company, Progressive Express Insurance Company and Twin City Fire Insurance Co. (a subsidiary of the Hartford Financial Services Group).

Under state law, motorists automatically receive a stacked policy unless they specifically opt out on a form they receive with their insurance applications and renewals.

Tami Torres of the Florida Department of Insurance said stacked insurance can be used only if a consumer owns more than one vehicle so "it appears" that anyone who owns one vehicle should opt out of the more expensive coverage.

Torres said the department will dispense that advice if a consumer asks but stressed it is up to insurance agents to explain the pros and cons of any coverage to their customers.

"If it's an insurance (option) that is not utilized by a consumer, certainly it would be incumbent on the agent to make the appropriate recommendation," she said.

Allstate spokeswoman Deborah Clouser said agents were in full compliance with the law and routinely explain options to customers.

"I can't say what the questions are that are asked or not asked," Clouser said, "but it doesn't benefit the agent at all not to offer the best coverage for that customer."

Several other plaintiffs reached Tuesday said they had yet to receive the suit. Nationwide and First Floridian said their companies would not comment on pending litigation.

Regardless of the merits of stacked coverage, some drivers say they wish they knew they had a choice of something cheaper.

One plaintiff, Alice Emmet of St. Petersburg, said she prides herself on negotiating the best deal possible for insurance. Yet, she said she did not realize Geico has been charging her for stacked coverage to insure her 1999 Accura.

"It's hard enough when you get up in years, they keep charging you fees. They charge you if you're 75 or over," the 76-year-old retiree said.

"I don't really understand (the stacked coverage) but I've always purchased it."

-- Jeff Harrington can be reached at harrington@sptimes.com or (813) 226-3407.

Insuring against the uninsured

Uninsured motorist coverage insures drivers who are hit by a vehicle whose driver is uninsured or underinsured. The coverage comes in two varieties: stacked and unstacked. Here's how they work:

STACKED: By "stacking" coverage, a motorist can add together the combined coverages for each vehicle that is insured and receive up to the full amount after a single accident.

For example, if someone owns two automobiles that each have uninsured motorist coverage of $25,000 per person and $50,000 per accident, that person will have $50,000 per person and $100,000 per accident available after a collision. If someone has three insured vehicles, the amount available would rise to $75,000 per person and $150,000 per accident. In Florida, motorists automatically received a stacked policy unless they request otherwise.

UNSTACKED: A motorist is insured for one vehicle only, so in the example above the coverage would be capped at $25,000 per person and $50,000 per accident. The premium may be significantly less than a stacked policy because the coverage is less.

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