Safeco Fined $95K

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Montana auto accident victims paid less than they deserved

HELENA – One of the nation’s largest insurance companies has agreed to pay a $95,000 fine and rebate dozens of Montanans to resolves a dispute with the office of Montana Insurance Commissioner Monica J. Lindeen, which alleged the company was shortchanging Montana auto accident victims.

Safeco Insurance Co., a member of the Liberty Mutual Group., was accused of paying its own insurance customers, and the Montanans involved in vehicle collisions with their customers, less than what they were owed in certain mostly low-dollar vehicle collision claims.

“We expect every insurance company, no matter how large, to follow Montana law and we’re pleased we could correct this situation for affected Montanans, ” Lindeen said.

Under the legal doctrine of “comparative negligence,” Safeco paid less than the amount of damages owed because the company argued the victims in vehicle accidents were also partially at fault and therefore only deserving of a portion of the insurance policy payments. Comparative negligence is a legitimate reason for insurance companies to withhold a percentage of damages, but in many of Safeco’s cases, the company was making the assertion where the facts of the actual accident did not support it. The pattern involved mostly low-dollar cases which were unlikely to be litigated by a private attorney.

Safeco has already paid the fine and rebated more than $15,000 to the 35 Montanans who were affected by the practice.

Lindeen’s office examined claims paid by Safeco over a 16-month period. They found numerous cases where the company applied “comparative negligence” when it was not supported by the facts of the actual accidents. In some cases, the company did not tell claimants, or the insurance commissioner’s office, why they were withholding a percentage of the insurance settlement amount.