Allstate sells homeowners insurance that includes coverage for
the dwelling in the event it is damaged or destroyed. In order to
determine the amount of insurance necessary for the dwelling,
Allstate hired an East Coast company, defendant Value Quote
Systems, Inc., to conduct a telephonic survey of insureds. The
program was referred to as the "ITV Program." The survey was
supposed to be a script of questions concerning the specific
characteristics of each insured’s home, including such things as
the type and number of bathrooms, style of the kitchen, wall and
floor coverings, special features, etc. The answers to the
questions were recorded on a computer and printed out on a
document called a Profile.

The specific characteristics recorded on the Profile were then
fed through a computer program that calculated the "replacement
cost" of the home based on those characteristics. This figure was
then used to set the dwelling coverage amount for the insured,
and the amount of premium paid by the homeowner. The higher the
dwelling coverage, the higher the premium.

During the relevant class period, over 1,200,000 Allstate
insureds had been included in the ITV Program.

Plaintiff’s Contentions:
Plaintiff alleged that defendants systematically inflated
homeowners’ replacement cost calculations for homes located in
California by, inter alia, attributing characteristics to their
homes which did not exist. These additional characteristics
increased the replacement cost for the home, and thus increased
the amount of premium paid by the homeowner. In addition,
plaintiff alleged that policyholders were denied the opportunity
to verify the information reflected on their Profile sheets, even
though Allstate’s agents were supposed to verify the accuracy of
the information with their insureds.

Defendant’s Contentions:
Defendants contended that if there were any errors in the
reporting of the characteristics of the insured’s home, it was
the result of mistakes by the homeowner or inputting errors. In
addition, Allstate contended that erroneous characteristics, if
any, could decrease as well as increase replacement cost
coverages. Allstate also contended that it implemented a program
to correct any potential errors, and that the amount of a
particular insured’s dwelling coverage was the result of their
own choice, not Allstate’s choice.

Damages:
Over-insurance of 1,200,000 policyholders’ dwelling coverage,
resulting in excessive premiums wrongfully retained by Allstate.