Geico Auto Insurance Windfalls and Premiums Illinois Class Action

Should auto accident figures and payouts bear a direct relationship to the amount drivers pay in auto insurance premiums? The complaint alleges that the Covid-19 pandemic has led less driving and thus fewer accidents, so that Geico Casualty Company, Geico Indemnity Company, and Geico General Insurance Company should be lowering rates or issuing refunds to customers.

The class for this action is all Illinois residents who bought personal auto, motorcycle, or RV insurance from Geico covering any portion of the period between March 21, 2020 and the present.

Illinois governor J. B. Pritzker issued a disaster proclamation on March 9, 2020, declaring all counties in Illinois to be disaster areas, due to the spread of Covid-19, closing schools, bars, restaurants, and casinos and banning gatherings of fifty or more people.

On March 21, he issued a statewide stay-at-home order requiring the majority of citizens to leave their homes only for essential activities.

Covid-19 has thus given a windfall to auto insurance companies, claims the complaint for this class action. The closings of businesses and schools, the issuing of stay-at-home orders, and the institution of work-from-home arrangements have meant far less traffic on the roads, and significantly fewer auto accidents. A chart in the complaint shows decreases in miles traveled for each week since May 15, with a 68% decrease for the week of April 12-18.

Accidents have also decreased, the complaint says: “For example, the Illinois State Police reported that between April 1, 2020 and April 26, 2020 alone, statewide car crash rates dropped by more than half when compared to 2019 rates. Although Geico does not report crash statistics to the State of Illinois, a submission to Ohio regulators estimated a decline in claims frequency between 25% and 50%.

The complaint therefore alleges, “As a result of this dramatic decrease in driving and auto accidents, the rates set—and thus the premiums charged—by auto insurance companies during the Covid-19 pandemic, including Geico, are unconscionably excessive.”

Geico has instituted a Geico Giveback program that applies a 15% discount on new and renewed policies. However, it does not apply to ongoing policies. Also, the complaint claims that “the 15% credit falls well short of what has been conservatively estimated as an adequate return on premiums.”

How much should consumers get back? The complaint says, “One published report calculates, very conservatively, that at least a 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.”

The complaint alleges that Geico’s failure to provide discounts or refunds violates Illinois state laws. The counts include violation of the covenant of good faith and fair dealing and frustration of purpose, among other things.

Article Type: Lawsuit
Topic: Insurance

Most Recent Case Event

Geico Auto Insurance Windfalls and Premiums Illinois Complaint

July 22, 2020

Should auto accident figures and payouts bear a direct relationship to the amount drivers pay in auto insurance premiums? The complaint alleges that the Covid-19 pandemic has led less driving and thus fewer accidents, so that Geico Casualty Company, Geico Indemnity Company, and Geico General Insurance Company should be lowering rates or issuing refunds to customers.

Geico Auto Insurance Windfalls and Premiums Illinois Complaint

Case Event History

Geico Auto Insurance Windfalls and Premiums Illinois Complaint

July 22, 2020

Should auto accident figures and payouts bear a direct relationship to the amount drivers pay in auto insurance premiums? The complaint alleges that the Covid-19 pandemic has led less driving and thus fewer accidents, so that Geico Casualty Company, Geico Indemnity Company, and Geico General Insurance Company should be lowering rates or issuing refunds to customers.

Geico Auto Insurance Windfalls and Premiums Illinois Complaint
Tags: Auto Insurance, Excessive Premiums, Insurance