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California Court Upholds $27.5 Million Penalty Against Mercury Insurance

On May 8, the California Court of Appeals upheld a $27.5 million fine against Mercury Insurance, the largest penalty ever assessed by the California Department of Insurance. Mercury Insurance received the fine in 2015 for charging its automobile insurance customers unapproved fees of $50 to $150 on top of Mercury’s approved rates from September, 1999 to August, 2004, in violation of Proposition 103. The Department of Insurance imposed a penalty of $150 for each violation from September 8, 1999 to August of 2004. The Court of Appeals ruled that Mercury’s brokers were acting as agents, thus requiring their fees to be part of the premium. The decision overturns a 2016 Orange County Superior Court decision that ruled to strike the fine.

For any questions about the California Court of Appeals decision, or for inquiries regarding compliant premium payment strategies, please contact Westmont Associates.

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