American Family Pays Arizona Homeowners $1.2M To Correct Mistake

NU Online News Service, May 13, 3:13 p.m. EST

American Family Mutual Insurance will pay 5,000 of its Arizona policyholders nearly $1.2 million after making an error involving repayment of taxes charged to contractors.

The Arizona Department of Insurance says a roofing contractor last December contacted regulators to report American Family was not including a tax building contractors must pay to the state—a Transaction Privilege Tax, which is normally included as part of an insurance claim.

The complaint to the insurance department followed a wave of claims from a winter storm in January and a hail storm in October last year.

The insurance department says American Family conducted an internal audit and found out a mistake by out-of-state adjusters led to it underpaying about 5,380 claims in 13 counties because the tax was not included in the payment. The insurer paid policyholders about $1.1 million to correct the error, plus about $45,500 in interest, says the insurance department.

Now that the Arizona Department of Insurance is aware of the problem it says it is looking into whether other insurers that used out-of-state adjusters overlooked the tax in claims payments.

American Family Insurance Group is the fourth-largest writer of personal property insurance in Arizona, with a 7.3 percent market share, according to Highline Data.

Highline Data is a part of Summit Business Media, which also owns National Underwriter.

Comments

Resource Center

View All »

Contractors General Liability Coverage 102

What is a prior work exclusion? Which option is right for my client? Why do...

Sign up today to get a 50% matching credit -...

Insurance marketing sometimes seems like it's a game of swings and misses, but we're here...

Guide: 5 Steps to Selling Cyber

Cyber risk and data security is on the agenda of every business owner and executive....

Citation Correlation

Do rigger and signalperson qualifications correlate with the cause of crane and rigging accidents? ...

Complete Guide to Electronic Signatures in Property & Casualty Insurance...

In property and casualty insurance, closing new business quickly is key. Learn how to leverage...

INSTANT ACCESS: Complimentary Sales Closer Questionnaires

Help property owners or managers compare your commercial residential property insurance coverage vs. the competition....

Determining Vacant Property Perils and Valuations

Are your clients fully covered for Vacant Properties? In this economic climate, your insureds may...

Risk Management for Law Firms

This package of 3 concise risk management articles offers straightforward content and practical suggestions law...

Guide: Top 15 E&O Risks-And How To Avoid Them

Accidents happen. But when it's an errors and omissions oversight, that accident can open your...

We'll Show You How to Reach Your Sales Goals

Whether you work alone or have a team of agents working for you, we can...

PropertyCasualty360 Daily eNews

Get P&C insurance news to stay ahead of the competition in one concise format - FREE. Sign Up Now!

Advertisement. Closing in 15 seconds.