A proposed class action claims National General Insurance Company and Integon National Insurance Company have unlawfully rescinded some consumers’ auto insurance policies based on their apparent failure to disclose members of their respective households.
The lawsuit alleges that although the defendants represent in their policies that collision damage will be covered in the event of an accident in which a covered vehicle is being driven by an insured, National General and Integon routinely refuse to reimburse insureds’ claims based on the assertion that a policyholder has misrepresented or concealed that they live with other relatives or household members. The case alleges this reasoning for denying policyholders’ claims is “fallacious and merely a ruse” designed to save the defendants millions in unreimbursed claims.
Per the case, National General and Integon’s denial of claims based on “immaterial provisions” of their auto insurance policies amounts to “post-accident underwriting” that allows the insurers to “unfairly avoid their contractual responsibilities under the insurance policies” while consumers are left holding the bag.
The lawsuit, filed in California by 25 plaintiffs, claims National General and Integon have breached their contracts with consumers and violated the state’s Business and Professions Code.
The defendants, according to the case, issue or underwrite auto insurance policies that typically have minimum policy limits and are issued to “high risk, unsophisticated consumers.” Per the complaint, the policies include restrictive collision coverage that is applicable only when the covered vehicle is being driven by the insured, i.e., not a member of their family or household.
The lawsuit alleges, however, that when a covered vehicle is involved in an accident while being driven by the named insured, the defendants have a policy and practice of denying their claim for coverage based on the insureds’ apparent failure to inform the defendants that they live with family members, relatives or other household members.
The suit argues that the defendants’ reasoning for denying claims, rescinding its insurance policies and returning premium payments based on an insured’s failure to disclose household members is “irrelevant and immaterial” given their insurance coverage applies only when the named insured is driving the covered vehicle.
As the case tells it, National General and Integon have “unlawfully and unfairly take[n] advantage” of their insureds for their own financial benefit:
“If the covered vehicle is not involved in an accident, the ‘Defendant Insurance Company(ies)’ profit from receipt of the premium. If the covered vehicle is involved in an accident when being driven by a named insured the ‘Defendant Insurance Company(ies)’ engage in post-accident underwriting by rescinding the policy on an immaterial representation in the application or an immaterial policy provision, saving themselves millions of dollars by not reimbursing their insured for a covered claim.”
Initially filed in San Bernardino County Superior Court on September 10, the lawsuit was removed to California’s Central District Court on October 19.
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