A class-action lawsuit might be taking shape against Geico auto insurance company. When the insurer announced its 15% “Geico Giveback” premium discount program in April, consumers understood it would reflect the dramatic reduction in driving during the COVID-19 crisis. Consumers, however, think the country’s second largest auto insurer undelivered on its promise, and they have taken legal action.
Plaintiffs in a lawsuit filed in federal court allege that Geico has overcharged policyholders during the coronavirus pandemic. They claim that for the timespan of mid-March to the end of April, they should have received discounts of 30 percent.
Unhappy consumers point out that Geico enjoyed a “substantial windfall in profits” due to COVID-19, basing this belief on the insurer’s 27.8 percent increase in pre-tax underwriting gains in the first quarter of 2020 when compared with first quarter reports of 2019.
Finally, plaintiffs express their unhappiness with Geico’s promised 15-percent discounts applying only to new and renewal policies, omitting from the discount previously paid premiums or those that policyholders will pay on policies they already had in place when the coronavirus crisis began.
Many auto insurers partially refunded premiums for policyholders in anticipation of reduced claims due to decreased driving when shelter-in-place orders took effect in various states. Some of these companies have issued refunds of up to 20 percent on three months of premiums.
The Geico policyholder who filed a lawsuit against the insurer lives in Chicago. The plaintiff seeks certification of a class to include Illinois residents who bought auto insurance from Geico that covered any segments of the time period from March 21, 2020 to present day.
The complaint also contains language seeking disgorgement of Geico’s tainted gains, declaratory an injunctive relief, and damages.