Fraud Roundup
California Insurance Commissioner John Garamendi has issued a “cease and desist” order against Trip Assured Inc., a company offering trip cancellation insurance in California, but without a certificate of authority to sell insurance in the state. Additionally, the Tennessee-based company is the focus of numerous complaints, primarily by senior citizens and their families, over its refusal to pay claims, the Department of Insurance said.
The cease and desist order, issued on Sept. 29, requires the company to stop “selling, marketing or offering for sale in California trip cancellation benefits or any other services contract that constitutes insurance.”
According to CDI, the company’s materials indicate that the product sold meets the statutory definition of insurance, despite the company’s claim that it is not insurance. Thus, the company has been deemed to be operating illegally in California.
CDI said Trip Assured’s product is marketed as financial protection against an unexpected cancellation of a trip. The brochure promises the purchaser a refund of any expenses paid in advance for the trip “up to the amount of purchase for non-refundable trip deposits, airline tickets, hotel penalties, cruise line and other charges.”
However, CDI said there are numerous provisions in the contract which make it unlikely that many people will collect any reimbursement. At least 30 claims have been denied for questionable reasons, CDI said.
In one case, Trip Assured denied payment to a client who “missed” the 72-hour notification deadline that he would not be able to take a trip. CDI said the client did notify Trip Assured more than 72 hours in advance, but the company calculated the 72-hour period from the time the client entered the hospital, not when he called to notify the company.
State Assemblyman Todd Spitzer, R-Orange, originally contacted DOI on behalf of one of his elderly constituents who allegedly had been victimized by Trip Assured.
The company could be fined $5,000 per day for every day it operates without a license in California.
Man sentenced in bogus scheme
A Santa Clara man who operated an unlicensed automobile insurance company will serve five years formal probation and pay restitution to his victims, following a two-year investigation by the California Department of Insurance’s Investigation Division and the Alameda County District Attorney’s Office.
On Aug. 17, in a 14 count felony complaint, Walter James Burhans, 51, was charged by the Alameda County District Attorney’s Office with two felony counts of grand theft of personal property and 12 felony counts of transacting insurance without authorization.
The investigation revealed between approximately Sept. 28, 2004, and Jan. 31, 2005, Burhans operated an unlicensed automobile insurance company, Flat Rate Insurance Co., appealing to high risk California insurance consumers by advertising low automobile insurance rates on the Internet. Some policyholders had automobile accidents and presented claims for their damages but, Burhans failed to pay all the claims submitted while leaving some consumers with liability exposures and without a vehicle.
“What makes this case especially troubling is that Mr. Burhans preyed on people who could least afford these losses,” said Commissioner John Garamendi.
Topics California
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