Day alleges GEICO wrongly refused to pay back overcharged premiums during the pandemic when fewer people were driving and fewer car accident claims were submitted. According to Day’s complaint, the auto insurer is at fault for “unfairly profiting from the global COVID-19 pandemic.”
In March 2020, states across the country, including California, began to enforce social distancing measures to slow the spread of COVID-19, which included closing schools and businesses and instituting strict “stay-at-home” orders that prevented most individuals from leaving their homes for extended periods of time, according to the class action complaint.
“While many companies, industries and individuals have suffered financially as a result of the COVID-19 pandemic, auto insurers like GEICO have scored a windfall,” a portion of the class action complaint reads. “Not surprisingly, as a result of statewide social distancing and stay-at-home measures, there has been a dramatic reduction in driving, and an attendant reduction in driving-related accidents.
"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.”
The state’s insurance commissioner, Ricardo Lara, said car insurers overcharged by 8% from March 2020 through September 2020, pointing out carriers collected $220 million in excess premiums in April 2020 alone, according to Day’s complaint.
“The bottom line: Insurance companies overcharged consumers and need to do more to make it right and help Californians recover,” said Lara.
GEICO has yet to respond to Day’s class action complaint. Look to a future edition of glassBYTEs for further coverage.
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