Attorneys say California’s third-largest auto insurer may violate state laws and breaches its own customer contracts

A California man launched a class-action lawsuit against Allstate Corp. accusing the insurance company and its subsidiaries of breaching its contracts with California insureds and unlawfully denying benefits to thousands of claimants, according to attorneys at Nunes Law and Hagens Berman.

The lawsuit, filed May 3, 2024, in the Superior Court of California, County of Fresno, states that Allstate’s recent corporate-level decisions violate California law dictating how uninsured motorist (UM) and underinsured motorist (UIM) benefits must be calculated, leaving California claimants receiving less than what they are owed. Attorneys say Allstate has increased its rates charged to California consumers by an average of 30%.

“We believe that California’s Uninsured Motorist Act makes clear that insureds have rights to certain benefits and compensation under their policies,” said Frank Nunes, President of Nunes Law, a Fresno-based consumer and personal injury firm. “We intend to fight for the thousands of Californians we believe were underpaid because of Allstate’s corporate-level decisions.”

According to the lawyers for the insured, Californians who settled a UM/UIM claim in which the insurer deducted workers’ compensation benefits from the claim may be entitled to more compensation even if the claim settled a year or two ago. Learn more about your rights and potential compensation.

California Allstate UM/UIM Benefits Explained

The lawsuit states that California law has established rules regarding how UM/UIM benefits must be calculated in the context of employees injured in the scope of their employment, yet, “Allstate routinely violates these rules by reducing UM/UIM benefits for individual insureds using workers’ compensation payments made to different insureds.”

“The law does not allow Allstate to write (or interpret) its policy language in a way that effectively ‘transfers’ its workers’ compensation offset between different individual insureds,” the lawsuit states.

In addition to its alleged denial of benefits in this manner, Allstate is also accused of failing to abide by its own policy language, which attorneys say limits the types of losses that can be offset using workers’ compensation benefits. An insurer can always provide more benefits than required by law, and Allstate did so but then refused to follow its own language, according to the complaint.

Worse yet, according to attorneys, Allstate does this in bad faith, “disregarding well-established California law both through its unlawful claim denials, as well as by failing to adequately investigate and analyze the nature of the losses covered by the workers’ compensation payments it uses to deny UM/UIM claims, and failing to disclose and/or explain available policy benefits to claimants as required by California law.”

The lawsuit paints a picture that Allstate’s policies directly harm its own customers, unnecessarily delaying UM/UIM benefits it does pay, and forcing insureds to wait years to receive compensation for their injuries – compensation that is often only partial, attorneys allege.

“If you’re down and out after someone hurts you and you have Allstate coverage—whether it’s from your policy or the owner of the car’s policy—you expect Allstate to step up and do right by you,” Nunes said. “No one expects, or should have to endure, Allstate doing them wrong and playing games on how it calculates what its customers are owed.”

The lawsuit’s named plaintiff suffered a head-on collision in 2018 when returning from a worksite with three coworkers. After this horrific tragedy, Allstate refused to pay benefits based on workers compensation payments made to others, which is improper under California case law, a ruling established in a case Allstate lost. They then refused to pay for losses that were not compensated by workers compensation, another improper position under California law. The lawsuit’s plaintiff then spent years in protracted communication with Allstate, receiving denial after denial and changing explanations for the non-payment.

The lawsuit brings claims of breach of contract and bad faith and seeks punitive damages, compensation for the proposed class, and action from the court prohibiting the use of Allstate’s policies that are alleged to be in violation of California laws protecting insureds.

Allstate’s subsidiaries are also named as defendants in the lawsuit and include Allstate Northbrook Indemnity Company, Integon National Insurance Company, Esurance Property and Casualty Insurance Company, National General Premier Insurance Company, Integon Preferred Insurance Company, Encompass Insurance Company, Safe Auto Insurance Company, National General Insurance Company, Allstate Insurance Company, National General Assurance Company, MIC General Insurance Corporation, and Century-National Insurance Company.

According to the lawsuit, Allstate is one of the largest auto insurers in the United States, with premiums paid to the company approaching $30 billion annually. In California, Allstate is the third-largest auto insurer, representing approximately 11% of the market, attorneys state. The company takes in approximately $46 million in annual premiums on California auto insurance policies, according to attorneys.

Nunes Law brought in the national class-action firm of Hagens Berman Sobol Shapiro to assist with the litigation.

Find out more about the class-action lawsuit against Allstate on behalf of California claimants.

About Hagens Berman

Hagens Berman is a global plaintiffs’ rights complex litigation law firm with a tenacious drive for achieving real results for those harmed by corporate negligence and fraud. Since its founding in 1993, the firm’s determination has earned it numerous national accolades, awards and titles of “Most Feared Plaintiff’s Firm,” MVPs and Trailblazers of class-action law. More about the law firm and its successes can be found at www.hbsslaw.com. Follow the firm for updates and news at @ClassActionLaw.

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