(NOTE: Updated at 2:25 p.m. with comments from Allied spokeswoman Elizabeth Giannetti.)

Allied Property and Casualty Insurance Co. has been assessed a civil penalty of $50,000 by the Iowa Insurance Division for overcharging policyholders who were supposed to have received discounts.

According to a consent order dated May 16, Allied violated the Iowa Unfair Trade Practices Act and the Iowa Casualty Insurance Act by making coding errors that resulted in 1,721 policies being overcharged in Iowa. The company said that as of Feb. 15, it has notified all affected policyholders and paid refunds or credits, including interest, of $382,757 to policyholders in Iowa.

The overcharges were made to policies on which accident-free or accident-forgiveness discounts should have been applied. The company said the overcharges resulted from errors in manually coding chargeable accidents that were under the discount thresholds.

The Iowa Insurance Division first received a policyholder complaint regarding an overcharge in November 2009; the company discovered after further research that it was not an isolated incident, according to the consent order.

Allied representatives were not immediately available to disclose whether the problem was limited to Iowa policyholders or affected customers in others states.

In addition to agreeing to pay a civil penalty of $50,000 plus $2,000 for administrative costs, Allied agreed to submit two reports to the Iowa Insurance Division, the first on Aug. 1 and the second on Aug. 1, 2012, to certify that modifications to its policy system are functioning properly. The company will also be subject to an independent audit of its procedures, systems and billing records within the next two years.

Allied officials said they have reviewed coding procedures with employees to prevent future errors.