Homeowners insurance rate challenge partially lost by Mercury

California Homeowners Insurance

The insurer has failed to win a segment of its ongoing legal challenge in California.

Mercury Insurance Group, the massive company serving California, has just lost a segment of its ongoing homeowners insurance rate legal challenge that it made against an order from state regulators.

The petition to delay the decrease in the insurer’s rates which had been ordered upon them was rejected.

The insurer lost their petition for the homeowners insurance rate decrease delay in the Sacramento Superior Court. The result will be that approximately 270,000 residents of California who are Mercury policyholders will be saving a total of over $16.5 million, said a press release from the California Department of InsuraCalifornia Homeowners Insurancence.

Mercury had asked the Commissioner if it could increase its homeowners insurance rates back in 2009.

Commissioner Dave Jones, on the other hand, decided in February that he would be giving his approval to the decision of an administrative law judge, which said that instead of increasing its rates, the premiums paid by the policyholders of that company should be decreased. The regulators felt that Mercury’s customers were already paying excessive amounts for their coverage.

Within the latest phase of the battle between Mercury and the state, the Superior Court has now placed its own approval stamp on an order to the insurer to decrease its rates without delay, despite the fact that the lawsuit filed by the insurer challenging the orders of the commissioner has not yet been decided.

Mercury and other homeowners insurance trade groups have been challenging the interpretation that regulators have taken of the authority that they have under Proposition 103 within the state. That reform ballot measure from 1988 said that – among other issues – excessive coverage rates are prohibited and that insurers are required to have their rates approved by the Commissioner before they can be implemented.

The insurer and the trade groups have been questioning whether Proposition 103 states that insurers are entitled to the chance to obtain a reasonable and fair rate of return, and whether certain forms of costs for advertising can be worked into the rate calculations for homeowners insurance companies.

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