Ohio Indemnity Accused of 427 Rule Violations

State Insurance Commissioner John Garamendi said Thursday that he is charging Ohio Indemnity Co. with 427 violations in claims settlement that, if confirmed, could bring a record $4.27 million in fines and a one-year suspension of the auto insurer’s California license.

Garamendi accused the Columbus-based company of imposing coverage limitations not clearly expressed in the policy language, demanding that policyholders submit unnecessary forms and documents, and of other violations of the state law regulating claims settlement.

“We dispute many of the facts asserted (by Garamendi) and will vigorously defend against this,” said Dick Barger, a Los Angeles attorney for Ohio Indemnity.

“We think that we are interpreting our contracts properly,” Barger added.

Ohio Indemnity, with 44,721 policyholders, is California’s 46th-largest auto insurer. It sells limited policies covering physical damage to vehicles.

Barger said Ohio Indemnity’s California claims are handled by Alamo Claims Services, an independent contractor. An Insurance Department spokeswoman said Alamo will not be charged in the case.

The next step is an administrative hearing at which Ohio Indemnity will be asked to show cause as to why the fine should not be imposed. The commission will then render a decision.

In announcing the charges, Garamendi noted that Ohio Indemnity was the worst-rated auto insurer in the department’s annual consumer complaint survey, released Nov. 1.

The state’s regulations on claims settlement practices carry penalties of up to $5,000 per violation and up to $10,000 for “willful” violations.

If the maximum penalty of $4.27 million is assessed, it will be the largest such fine in California history, exceeding the $1.1 million assessed in March against Metropolitan Life Insurance Co. for violations in marketing life insurance policies.