Home Blog Car Accident Allstate Drops “Accident Forgiveness” in California

Allstate Drops “Accident Forgiveness” in California

By Aline Miranda on January 27, 2011

No doubt you’ve seen the ads for Allstate’s “accident forgiveness” program, which prevents Allstate from increasing your premium if you have an accident. Approximately 10% of Allstate’s 1.5 million customers in California purchased this additional coverage.

The Los Angeles Times reported last week that a consumer watchdog group asked the California Department of Insurance to investigate Allstate’s “accident forgiveness” program, which they say is deceptive, unfair, and unlawful because it surcharges customers up to 15% with the promise that a future accident will not cause the customer’s insurance rates to go up.

Bloomberg Businessweek also reported: Allstate’s accident forgiveness program became “a cash cow for Allstate by charging customers more than they should be paying under California’s good driver law,” said Todd M. Foreman, in-house counsel for Consumer Watchdog. “Allstate was receiving $20 million a year in extra premiums since it began selling the program in California in 2008.”

Is it fair that Allstate’s customers pay more now to avoid paying more later? When the Department of Insurance decided to investigate, Allstate discontinued the program rather than cooperate with the Department’s investigation. What is really behind Allstate’s “accident forgiveness” program and what is Allstate hiding?