Washington OIC fines USAA and Allstate for claims handling violations

Washington Insurance Commissioner Patty Kuderer has fined USAA and Allstate $230,000 for claims handling violations and other unfair practices, according to a press release from the Office of the Insurance Commissioner (OIC). 

USAA was fined $140,000 for unfair or deceptive acts or practices in how it handled auto claims. Allstate was fined for claims handling violations and for not following the OIC’s premium change transparency rule. 

The OIC opened a market continuum action on June 18, 2024, after a market analysis identified a trend in private passenger automobile claims handling violations, the USAA consent order states. It adds that the OIC received 445 complaints between April 2019 and April 2024. 

Forty-three complaints found unfair claims settlement practices. Non-compliance with required communication standards was listed in 36 of the complaints. 

The OIC reviewed 125 complaints and found one or more potential claims handling violations in 31 USAA auto claims. 

In 2024, the OIC asked USAA for a detailed description of how and why each claim handling error occurred, a timeline of events showing how the company remediated the errors, and any plans to remediate the errors going forward. 

USAA agreed to 19 of the 31 claims, the consent order states. A remediation outlined by USAA included coaching adjusters by their managers and an updated process for loss of use evaluations. 

The 19 claims validated by USAA in February 2025 include: 

• • 11 claims where USAA failed to acknowledge and act reasonably promptly upon communication of the claims.
  • 11 claims where USAA failed to acknowledge pertinent communications within 10 working days.
  • Four claims where USAA failed to complete its investigation within 30 days.
  • 11 claims where USAA failed to adopt and implement reasonable standards for prompt investigation.
  • Five claims where USAA refused to pay claims without conducting a reasonable investigation.
  • One claim where USAA failed to include all applicable government taxes and fees.
  • One claim where USAA failed to notify the first party claimant that it needed more time to determine whether the claim should be accepted or denied.

The OIC gives descriptions of some of the claims. This includes the OIC receiving a consumer complaint that USAA incorrectly valued their equipment trailer by using alternative brands to find comparable values after the loss. After the OIC contacted USAA, the consumer was paid an updated $10,511 insurer-retained total loss settlement. 

After another 2024 consumer complaint that confirmed applicable state, county, and municipal taxes were not included in an original valuation, the OIC asked USAA to review all total loss settlements since April 2022. 

USAA responded in June that it had reviewed 7,598 total loss statements and identified 216 claims where they did not pay taxes or fees, according to the consent order. It adds that the insurance company stated it would pay the taxes and fees owed within the next 60 days. 

Two months later, the OIC requested additional information from USAA. The company conducted a manual review of total loss data and determined sales tax was not paid in 101 claims and fees were not paid in 153 claims, for a total of 254 claims. 

The order states that USAA paid 45 total loss claims $68,000 for owed sales tax and another 114 claims $20,000 for owed fees. 

Allstate was fined $90,000 by the OIC.

A consent order for Allstate states the OIC opened a continuum action in June 2024 due to a high number of complaints from January 2024 through June 2024 related to Allstate’s claims handling. 

The OIC asked Allstate to provide a database of claims for the time period. The database included 3,040 claims, of which OIC randomly selected 108 for review. 

The review found nine claims, including 16 claims handling violations, the order states. 

The violations include: 

• • One claim where Allstate misrepresented pertinent facts when it issued a claim payment for significantly less than its own estimate.
  • Three claims where Allstate failed to acknowledge and act reasonably promptly upon communications related to claims.
  • Eight claims where Allstate failed to adopt and implement reasonable standards for processing and payment of claims after the obligation to pay was established. This includes the company delaying payment by several weeks or several months after it had determined the loss amount. 
  • Two claims where Allstate failed to complete its investigation in a timely manner.

Allstate validated the OIC findings in May 2025, the consent order states. 

The OIC found during its review that Allstate’s homeowners policy declaration pages between April 2024 and April 2025 were missing mandatory language. The information was missing from more than 86,705 declaration pages.

This included 86,136 policies with a premium increase, 545 policies with a premium decrease, and 24 policies with no premium change.  

The company told the OIC that it began including the language on renewal policies starting April 23, 2025. It also validated the OIC’s findings in May 2025. 

“We take our role as a consumer protection agency seriously,” Kuderer said in the press release. “These orders, and the actions we’ve taken against insurers for failing to meet their obligations to policyholders when processing their claims, are a testament to that work.” 

The release adds that the OIC has issued $495,200 in fines for violations of insurance laws from April through August. 

In August, the OIC also overhauled minimum standards for insurance company claims handling by adopting a new rule. 

The changes, effective Oct. 18, are extensive and include tightening timelines, along with estimating and short-payment disclosures.

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