Allstate Phases Out Your Choice Auto Program in California

Allstate Insurance has agreed to stop selling its “Your Choice Auto” (YCA) insurance program in California, in response to a challenge brought by the nonprofit Consumer Watchdog. The insurer has stopped issuing new YCA policies and will phase out the approximately 150,000 existing YCA policies in California by November 2011.

Consumer Watchdog said the program is “deceptive and overpriced,” asserting that under the YCA program, Allstate charged drivers up to 15 percent higher-than-normal premiums with the promise that future tickets or accidents would not be used to increase premiums. The consumer action group said an investigation it conducted found that the purported benefits were not worth the premium being charged.

According to the consumer group, Allstate was:

Consumer Watchdog estimates that Allstate was receiving $20 million per year in extra premiums since it began selling the program in California in 2008. Allstate agreed to stop selling the policies after the group requested a formal hearing on the legality of the program with the state Department of Insurance.

Although the YCA program had been initially approved by the California Department of Insurance, it was challenged by Consumer Watchdog under Proposition 103, which sets guidelines for insurance practices and products in California.

The agreement by Allstate to remove YCA from the California market was approved by then-Insurance Commissioner Steve Poizner on Dec. 20, 2010, with an effective date of Jan. 10, 2011.

Prop 103 requires insurance companies to open their books and submit to public hearings to justify that rates are not excessive and insurance products are legal. Consumers may intervene in or initiate proceedings to challenge any rate or product that violates Prop 103.

Allstate did not respond to repeated calls from Insurance Journal to comment on this issue.