Class Action: Allstate Overcharges Calif. Homeowners for ‘More Space Than They Actually Have’

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Allstate has overcharged California homeowner’s insurance policyholders since at least 2019 by inflating the square footage of their homes when calculating premiums, a proposed class action claims.

The 24-page lawsuit alleges defendant Allstate Insurance Company, one of the largest insurers in the U.S., is “well-aware” that it’s been overcharging hundreds of thousands of California residents by including built-in garage space as the “total finished living area,” yet has done nothing to rectify the practice. The suit estimates that the total amount of money Allstate has misappropriated in the process is in excess of $10 million. 

Per the case, Allstate calculates monthly homeowners’ insurance premiums based on a property’s “total finished living area” and “total living area.” The larger the total finished living area and total living area, the higher the premium for which the policyholder is responsible, the case explains.

According to the complaint, the total finished living area is the area of a property intended for human occupancy and thus should not include built-in garages. As the lawsuit tells it, the equation that should be used by Allstate to calculate a property’s total living area is the sum of the total finished living area and the built-in garage.

The case claims, however, that Allstate wrongfully includes built-in garages when calculating a property’s total finished living area, causing policyholder premiums to be artificially increased. 

“Said another way, Allstate is using the following formula: Total Finished Living Area (including Built-In Garage) + Built-in Garage = Total Living Area,” the lawsuit reads.

Further, the plaintiff claims the companion earthquake coverage also offered by Allstate is subject to the same incorrect formula.

The suit looks to represent all California Allstate policyholders who’ve held a homeowner’s or renter’s policy with the company since August 5, 2016 and have at least one built-in garage. 

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