ANNAPOLIS – The Maryland Insurance Administration Friday warned the state’s auto insurance companies to stop raising premiums for customers involved in accidents caused by faulty Firestone tires, or face legal consequences.
“We want to make sure that Maryland drivers aren’t unfairly penalized for accidents beyond their control,” said Maryland Insurance Commissioner Steven B. Larsen in a written statement.
The agency issued the warning after receiving fewer than five documented complaints from Maryland drivers whose premiums were increased because of accidents linked to the faulty tires.
The agency would not release the names of the accused insurance companies.
“We typically don’t comment on open complaint files,” said Bob Becker, the agency’s associate commissioner of property and casualty.
Despite the “handful” of complaints the agency has received, it decided to act because it believes the number of affected Maryland insurance customers could be much higher.
“The consumer doesn’t always pick up the phone and call us if there is a problem,” Becker said.
“We don’t have a very good gauge on how widespread the problem is,” he added.
There have been 29 cases of Bridgestone/Firestone tire failure reported from Maryland, according to a database kept by the National Highway Traffic Safety Administration.
However, the accuracy of that database has been called into question. A Capital News Service investigation found that two pets were mistakenly included in the 103 fatalities the agency linked to the defective Firestone tires. The federal regulatory agency reduced the number of fatalities to 101 last week, and is in the process of combing its database for other errors.
Insurance companies and insurance trade associations contacted had not yet received the Maryland Insurance Administration’s warning. But all said the practice is not a common one.
“The general procedure when one of our insured customers suffers a loss that we believe to be the result of someone else’s negligence is to pay their damages, . . . then go after the party we believe to be at fault,” said Larry Richardson, a Bel Air-based claims attorney for State Farm Insurance Co.
“We go after the negligent party as a way of keeping our (customer) with an unblemished record,” he said.
It would not be “regular procedure” to raise premiums for customers involved in accidents caused by faulty tires, Richardson said.
“To our knowledge this is not a huge problem. We’ve never heard about any of our member companies doing this,” said Brenda O’Connor, public affairs director for the mid-Atlantic branch of the American Insurance Association, which represents 370 insurance companies nationwide.
Maryland insurance regulators are ordering all insurance companies practicing in the state to immediately stop the practice of raising premiums of customers after accidents linked to defective tires, Bridgestone/Firestone or otherwise.
Violators face penalties ranging from a simple fine to the revocation of their state business licenses, an action that would bar a national insurance company from doing business in Maryland.
Becker said the agency has not ruled out the possibility of penalizing the insurance companies named in the handful of complaints it has received.