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Geico Auto Insurance Profits from Covid-19 California Class Action

Has Geico been “unfairly profiting from the global Covid-19 pandemic”? The complaint for this class action claims it has, because stay-at-home orders and social distancing have led to a reduction in driving and an accompanying reduction in accidents. Geico has therefore had to make fewer payouts related to car accidents. The action brings suit against Geico Casualty Company, Geico Indemnity Company, and Geico General Insurance Company under California law.

The class for this action is all California residents who bought personal auto, motorcycle, or RV insurance from Geico covering any of the time period between March 1, 2020 and the present.

The alleged gains for Geico are not small. The complaint says, “According to its parent company, Berkshire Hathaway, Geico reported pretax earnings of $3.428 billion in 2020. That is more than double Geico’s earnings over the same period in 2019.”

Geico seems to have thought of this itself, with a “Geico Giveback” program providing a 15% discount on new and renewed policies between April and October of 2020. But the complaint calls this “woefully inadequate[.]” It alleges that “at least at 30% average refund of paid premiums would be required to make up for the excess amounts paid by consumers for just the period between mid-March and the end of April of 2020.”

The governor of California, Gavin Newsom, proclaimed a state of emergency on March 4, 2020. On March 19, he issued a stay-at-home order for the state. Since then, additional stay-at-home orders have been issued at various times, since the pandemic has continued to rage in the state.

California, like many other states, saw a massive reduction in driving. Businesses and stores closed, many people worked from home, and some others lost their jobs entirely. This led to fewer cars on the road and fewer accidents. The result was fewer accident claims for auto insurers. The complaint alleges that there have been half as many traffic collisions.

The complaint displays a chart of reductions in driving. For each week between March 15 and April 25, it shows the percentage decrease of miles traveled. The first week, the decrease (presumably over normal) was 53%. The decreases in the other weeks in the table range from 71% to 77%. The complaint alleges, “Upon information and belief, decreases in pre-Covid miles traveled continued through the end of 2020, and will continue for the foreseeable future.”

Insurance rates, the complaint claims, are meant to cover claims and expenses, based on historical information. But historical data was of no use in predicting accident rates in 2020 once stay-at-home orders had been issued.

The counts include violation of the covenant of good faith and fair dealing and unjust enrichment, among other things.

Article Type: Lawsuit
Topic: Insurance

Most Recent Case Event

Geico Auto Insurance Profits from Covid-19 California Complaint

March 25, 2021

Has Geico been “unfairly profiting from the global Covid-19 pandemic”? The complaint for this class action claims it has, because stay-at-home orders and social distancing have led to a reduction in driving and an accompanying reduction in accidents. Geico has therefore had to make fewer payouts related to car accidents. The action brings suit against Geico Casualty Company, Geico Indemnity Company, and Geico General Insurance Company under California law.

Geico Auto Insurance Profits from Covid-19 California Complaint

Case Event History

Geico Auto Insurance Profits from Covid-19 California Complaint

March 25, 2021

Has Geico been “unfairly profiting from the global Covid-19 pandemic”? The complaint for this class action claims it has, because stay-at-home orders and social distancing have led to a reduction in driving and an accompanying reduction in accidents. Geico has therefore had to make fewer payouts related to car accidents. The action brings suit against Geico Casualty Company, Geico Indemnity Company, and Geico General Insurance Company under California law.

Geico Auto Insurance Profits from Covid-19 California Complaint
Tags: Auto Insurance, Excessive Profits, Insurance