Many companies and individuals suffered from the Covid-19 pandemic in 2020, says the complaint for this class action, “auto insurers like Farmers [Insurance Exchange] have scored a windfall.” This is because stay-at-home orders, social distancing, and people working from home have resulting in far less driving, fewer cars on the road, and thus fewer car accidents. The complaint alleges that there has been “a drastic and unfair increase in Farmers’ profits at the expense of its customers.”
The class for this action is all California residents who bought personal auto insurance from Farmers that covered any portion of the time between March 2020 and the present.
On March 4, 2020, Governor Gavin Newsom proclaimed a state of emergency in California due to the Covid-19 pandemic. On March 19, he issued at stay-at-home order, and additional stay-at-home orders have been issued since then.
The complaint quotes a report as saying, “With shelter-in-place restrictions and business closings, most people stopped driving or reduced their driving dramatically. With fewer cars on the road, there were dramatically fewer accidents. Fewer motor vehicle accidents mean fewer auto insurance claims.”
On page 5 of the complaint, a chart from the same report shows the decreases in miles traveled between mid-March and the end of April, 2020. The decreases from previous figures range from 53% to 77%.
The complaint notes, “According to the Road Ecology Center at the University of California, Davis, traffic collisions, including those involving injuries or fatalities, dropped by roughly half after California instituted its stay-at-home order.”
The complaint alleges, “Auto insurance rates, including those set by Farmers, are intended to cover the claims and expenses that they expect to occur in the future, extrapolated from historical data.”
The complaint alleges that if a driver’s circumstances change, the driver is supposed to report the change to Farmers, and that Farmers may raise premiums for the driver’s policy if the changes increase its risks. It implies that this ability to change rates should work in the other direction as well.
Farmers did announce a 25% premium credit for April 2020 and another 15% for May 2020. No other credits or reductions were offered.
However, the complaint alleges that this is not nearly enough: “According to conservative calculations by the Center for Economic Justice and the Consumer Federation of America based on motor vehicle accident data, at least a 30% minimum average premium refund to consumers would be required to correct the unfair windfall to auto insurance companies, including Farmers, just for the time period from mid-March through the end of April 2020.”
The first count in this case is breach of contract—violation of the covenant of good faith and fair dealing. Other counts include unjust enrichment, frustration of purpose, and violation of California’s unfair competition law.
Article Type: LawsuitTopic: Insurance
Most Recent Case Event
Farmers Insurance Exchange Auto Insurance Windfall California Complaint
June 21, 2021
Many companies and individuals suffered from the Covid-19 pandemic in 2020, says the complaint for this class action, “auto insurers like Farmers [Insurance Exchange] have scored a windfall.” This is because stay-at-home orders, social distancing, and people working from home have resulting in far less driving, fewer cars on the road, and thus fewer car accidents. The complaint alleges that there has been “a drastic and unfair increase in Farmers’ profits at the expense of its customers.”
Farmers Insurance Exchange Auto Insurance Windfall California ComplaintCase Event History
Farmers Insurance Exchange Auto Insurance Windfall California Complaint
June 21, 2021
Many companies and individuals suffered from the Covid-19 pandemic in 2020, says the complaint for this class action, “auto insurers like Farmers [Insurance Exchange] have scored a windfall.” This is because stay-at-home orders, social distancing, and people working from home have resulting in far less driving, fewer cars on the road, and thus fewer car accidents. The complaint alleges that there has been “a drastic and unfair increase in Farmers’ profits at the expense of its customers.”
Farmers Insurance Exchange Auto Insurance Windfall California Complaint