Allstate Insurance Co. has agreed to pay an unprecedented $1-million fine to settle charges brought by the state Department of Insurance that it mishandled claims from the devastating 1991 fire in the Oakland and Berkeley hills, the agency said Tuesday.
The department had charged in September that Allstate delayed coming to terms on replacement costs with some customers and put them through an arduous process of getting estimates. In addition, the complaint said, eight Allstate agents confused clients about the terms of their policies.
Allstate, which had nearly 600 claims from the fire, will pay $750,000 to settle charges against the company and $250,000 on behalf of agent Charles A. Strahan of San Jose. Strahan's license will be suspended for three months, and he will be on probation for 15 months after that. The department agreed to drop all charges against the other agents.
The fine is unprecedented in size, said Elena Stern, a Department of Insurance spokeswoman.
The October, 1991, fire resulted in insured losses of $1.7 billion, making it the nation's most costly urban brush fire.
"We've all learned lessons from this catastrophe," said Robert Pike, senior vice president and general counsel of Allstate, a unit of Sears, Roebuck & Co. that is based in Northbrook, Ill.