Safeco Insurance fined for denying coverage based on credit scores

SACRAMENTO -- California regulators have fined Safeco Insurance Co. of Seattle $900,000, saying the company violated state law banning the use of credit scores to decide whether to issue a homeowner’s policy.

The state Department of Insurance made the allegation after performing an audit of the company for 2006 and 2007. The audit also found that Safeco, a unit of Liberty Mutual, failed to follow its own rating guidelines and committed other auto-rating violations.

“When we find that insurers are not complying with the law, we are able to take appropriate action and protect consumers,” California Insurance Commissioner Dave Jones said.

The market conduct examination found that in 26 cases, homeowners were denied coverage because of their credit scores. The exam also revealed that Safeco inconsistently applied good-driver and other discounts to auto insurance policies. As a result, it was required to refund $3.1 million to California policyholders, the insurance department said.

As part of a Friday legal agreement with the department, Safeco denied that it violated California law.

ALSO:

Gov. Brown releases proposed fracking regulations

California insurance chief criticizes health insurance exchange

1 million Californians losing their health policies may get a reprieve