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CA Department of Insurance

Insurance Commissioner Dave Jones Announces Settlement Benefitting Earthquake Insurance Policyholders

News: 2012 Press Release

For Release: February 28, 2012
Media Calls Only: 916-492-3566
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Insurance Commissioner Dave Jones Announces Settlement Benefitting Earthquake Insurance Policyholders
GeoVera Insurance Company to Correct Underwriting Practices; Policyholders to Receive Refunds

Insurance Commissioner Dave Jones announced today that the California Department of Insurance (CDI) has settled a noncompliance action against GeoVera Insurance Company, following a 2010 investigation into a number of consumer complaints concerning GeoVera's underwriting practices. As a result of the settlement, GeoVera will pay refunds to policyholders, in addition to a $235,000 fine.

"I am pleased that we could come to a positive resolution of this matter that will see policyholders receive a much-deserved refund," Commissioner Jones said. "At the department, our top priority is to ensure that consumers receive a fair shake from insurers, and I feel strongly that our investigation led to that in this matter."

During the course of its investigation, CDI notified GeoVera of its intention to initiate a noncompliance action against them, alleging violations of the California Insurance code, focusing on:

  1. Improper delivery of renewal and cancellation notices;
  2. Procedures for automatically charging renewal premium to policyholders' credit cards;
  3. Burdensome and unfair processes for considering policyholder objections to public information concerning the policyholder's residence;
  4. Mid-term changes to coverage or property characteristics for policies;
  5. Duplicative construction debit rating practices; and
  6. Methodologies for processing refunds.

While GeoVera denied its actions violated the law, the company has agreed to a number of corrective actions as part of the settlement, including:

  • Changing its underwriting procedure for renewal and cancellation notices, auditing its policies and refunding money to consumers adversely affected by the company's former renewal and cancellation processes;
  • Revising its policy renewal form so that policyholders may easily cancel automatic payment by credit card;
  • Improving its process for verifying information contained in public records that may be incorrect, then auditing and refunding policyholders who were overcharged based on an error contained in the public record; 
  • Auditing its records to identify instances in which unauthorized changes were made to policies mid-term, and then refunding to policyholders the difference in premium;
  • Revising its construction debit underwriting rules to remove potentially duplicative rating criteria; and
  • Changing its procedure for providing refunds to policyholders and extending the time period for refunding policyholders.

In addition to these corrective actions, GeoVera will also pay a $235,000 fine.

A copy of the Notice of Noncompliance is available to the public.

The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at Non-media inquiries should be directed to the Consumer Hotline at 800.927.4357. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.

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