Most states require drivers to have car insurance policies. Of course, prices are going up, which means most people are trying to find ways to save. However, an Allstate-owned insurance company has a lawsuit on its hands for forcing certain coverages onto drivers who didn’t need it. This comes after several insurance companies were recently sued for similar reasons. 

The company added coverage to car insurance policies that people didn’t need

According to The Street, the Department of Justice is suing National General for forcing several drivers to get collateral protection. The problem is that these people already had coverage through means other than their car insurance policies with the company. This applies to people who financed their vehicles through Wells Fargo. 

The lawsuit, filed on July 24th, calls it a scheme to defraud drivers who didn’t need the specialized coverage. The court docs say National General did this between 2005 and 2016. The suit says that the company “knew or recklessly disregarded” the fact that these customers didn’t need the coverage added to their car insurance policies. 

The suit reads, “In fact, from 2008 to 2016, National General knew that it falsely force-placed insurance between 56 and 93% of the time.” It continues, “These improper force-placements harmed borrowers — causing borrowers to pay money they did not owe, borrowers to default on their loans, vehicle repossessions, and negative impacts to borrowers’ credit scores.”

The extra cost of the car insurance policies went to the drivers’ auto loans with Wells Fargo, which came out to about $1,100 per year for each customer. Apparently, between 1.2 million and 2.1 million people had the coverage added to their accounts. The company canceled some of the coverage before charging the customers. However, between 640,000 and 1.4 million people had the fee added to their balances with Wells Fargo. The Justice Department wants the company to get the maximum penalty under the Financial Institutions Reform, Recovery, and Enforcement Act. 

The lawsuit says the amount the department is seeking will be determined at the trial.