Geico faces California class action claim overcharged auto insurance claimant

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A federal judge said Monday that a lawsuit charging Geico Corp. of overcharging more than 2 million California policyholders on auto insurance at the start of the COVID-19 pandemic may proceed as a class action lawsuit.

U.S. District Judge Beth Labson Freeman in San Jose, Calif., dismissed Geico’s claim that a class action lawsuit regarding the alleged inadequacy of its “Geico Giveback” program would create “insurmountable management problems.”

Geico, part of Warren Buffett’s Berkshire Hathaway Inc., said a class action lawsuit would not sufficiently take into account the differences between policyholders, including the periods for which they had insurance.

The Chevy Chase, Maryland-based insurer also said it would be difficult to assess damages, isolate pandemic costs and adjust rates retroactively.

But the judge said a class action was preferable to individual lawsuits and that the plaintiffs’ damages model “could present an appropriate percentage of reimbursement over a long enough period” to address management issues.

Geico’s attorneys did not immediately respond to requests for comment. Lawyers for the plaintiffs did not immediately respond to similar requests.

Policyholders objected to Geico’s decision to provide $2.5 billion in credits, including 15% on renewals, starting in April 2020, reflecting the way people were driving and having accidents less often. ‘era.

They said Geico reaped a “windfall” because credit was “far short” of adequate given the diminished risk, and accused the insurer of falsely claiming its credits offered “relief substantial and complete”.

Some insurers, including State Farm and Allstate Corp., have offered pandemic-related reimbursements to policyholders.

The class covers California residents who purchased Geico car, motorcycle, or RV insurance between March 1, 2020 and present.

Geico is defending against a similar federal lawsuit in Chicago and in May persuaded a Manhattan appeals court to uphold a judge’s dismissal of a similar lawsuit there.

Berkshire, based in Omaha, Nebraska, has owned 100% of Geico since 1996.

The case is Day v. Geico Casualty Co et al, US District Court, Northern District of California, No. 21-02103.

(Reporting by Jonathan Stempel in New York; editing by Marguerita Choy)

California Auto Lawsuits

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