State Strips Sentinel of Its License : Insurance: Garamendi cites ‘numerous’ code violations by the high-profile agency. Owner denies charges, will appeal.

Sentinel Insurance Agency, a high-profile statewide agency that claims 100,000 auto insurance customers, is being stripped of its license for “numerous and repeated violations of the insurance code,” state Insurance Commissioner John Garamendi said Thursday.

Ronald Eugene Higgerson, Sentinel’s owner, will also lose his insurance license, Garamendi said. The revocations are effective Dec. 18.

“This agency has defrauded hundreds of insurance customers of thousands of dollars over the years,” Garamendi said in a statement.

Higgerson denies any wrongdoing and will appeal the revocation order, his lawyer, Dave M. Ramirez, said.

Sacramento-based Sentinel is an independent agency that sells policies from numerous insurance companies. Its customers’ policies are not affected by the shutdown.

Sentinel, which has advertised heavily and concentrated on high-risk, hard-to-insure drivers, allegedly cheated people by steering them toward expensive credit plans to finance their premiums and charging them $55 to $95 a year for emergency-towing insurance that customers were told was included in their basic coverage, Garamendi said.

Sentinel agents were found to have been paid up to $20 for each referral to the finance company, Coast Premium Finance Co., Garamendi said.

Customers were signed up for the plan and charged interest rates of up to 41%, he said, despite the fact that a zero-interest payment plan was available for many of them through the California Automobile Assigned Risk Plan, the high-risk pool for people with bad driving records.

Moreover, the company that issued the towing policies is owned by Higgerson, Garamendi said.

Sentinel agents also failed to disclose to customers that they were being placed in the California Automobile Assigned Risk Plan, he said. Many of these customers were not eligible for the plan and were unaware that applications had been submitted for them, Garamendi said.

In addition, customers were routinely charged brokers’ fees that were not disclosed to them, he said.

Higgerson’s attorney said Sentinel customers were notified of all fees and were required to sign application forms with the risk pool’s name in large letters. He added that many low-income customers chose the finance company payment plan over the risk pool’s plan because the individual payments were lower, even though the total was higher.

“John Garamendi attacked Sentinel strictly for political mileage,” Ramirez said.

Garamendi has not referred the case to authorities for criminal prosecution, a spokeswoman said.

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At two of Sentinel’s former offices in Sacramento on Thursday, receptionists were answering the telephones in the name of Liberty Insurance.

Liberty Insurance is owned by Michael Higgerson, Ronald Higgerson’s son.

Joe Garcia, office manager at one of the Liberty offices, said Liberty purchased Sentinel’s “book of business” several months ago.

The Insurance Department would have no problem with Liberty buying Sentinel’s business, as long as Ronald Higgerson is not in any way involved with Liberty, a spokeswoman said.

The Insurance Department investigation of Sentinel was launched in the fall of 1990. In March, 1992, Garamendi sought license revocations for Ronald Higgerson and the firm. After hearings earlier this year, Administrative Law Judge Keith Levy recommended the revocations announced Thursday.