Liberty Mutual Fire Insurance Company has “unfairly profited” from the Covid-19 pandemic, says the complaint for this class action. This is because, the complaint claims, social distancing and stay-at-home orders drastically decreased the amount of driving people did, resulting in fewer accidents and a windfall for auto insurers.
The class for this action is all California residents who bought personal auto insurance from Liberty Mutual covering any part of the time period from March 1, 2020 to the present.
In response to the Covid-19 pandemic, on March 19, 2020, California Governor Gavin Newsom imposed a statewide stay-at-home order. Since then, the order has been renewed or re-imposed. This plus the closings of businesses has meant far less driving for most people.
The complaint quotes a report as saying, “With shelter-in-place restrictions and business closing, 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.”
The complaint quotes a joint report from the Center for Economic Justice and the Consumer Federation of America as saying, “Because of Covid-19 restrictions, the assumptions about future claims underlying insurers’ rates in effect on March 1 became radically incorrect overnight. … The then-current rates became excessive not just for new policyholders going forward, but also for existing policyholders whose premium was based on now-overstated expectation[s] about insurance claims.”
Attached to the complaint at filing was a sample Liberty Mutual auto policy stated under “Changes” the following: “If there is a change to the information used to develop the policy premium, we may adjust your premium.”
According to calculations of the Center for Economic Justice and the Consumer Federation of America, based on accident data, the complaint alleges, “at least a 30% minimum average premium refund to consumers would be required to correct the unfair windfall to auto insurance companies, including Liberty Mutual, just for the time period from mid-March through the end of April 2020.”
While Liberty Mutual did give personal auto insurance customers a refund, the complaint alleges that it amounted to only 15% for only two months. After that, the complaint says, it reduced the amount to 5% of the twelve-month premium from June 2020 to May 2021. The complaint alleges that this is inadequate to compensate customers for the windfall provided by the changed circumstances.
The complaint points to California’s Proposition 103, passed in 1988, that was meant to “protect consumers from arbitrary insurance … practices, to encourage a competitive insurance marketplace … and to ensure that insurance is fair, available, and affordable to all Californians.”
Article Type: LawsuitTopic: Insurance
Most Recent Case Event
Liberty Mutual Fire Insurance Windfall During Covid-19 California Complaint
July 1, 2022
Liberty Mutual Fire Insurance Company has “unfairly profited” from the Covid-19 pandemic, says the complaint for this class action. This is because, the complaint claims, social distancing and stay-at-home orders drastically decreased the amount of driving people did, resulting in fewer accidents and a windfall for auto insurers.
Liberty Mutual Fire Insurance Windfall During Covid-19 California ComplaintCase Event History
Liberty Mutual Fire Insurance Windfall During Covid-19 California Complaint
July 1, 2022
Liberty Mutual Fire Insurance Company has “unfairly profited” from the Covid-19 pandemic, says the complaint for this class action. This is because, the complaint claims, social distancing and stay-at-home orders drastically decreased the amount of driving people did, resulting in fewer accidents and a windfall for auto insurers.
Liberty Mutual Fire Insurance Windfall During Covid-19 California Complaint