Law360 (November 2, 2020, 4:13 PM EST) -- Two Illinois policyholders said Geico Casualty Co. overcharged their auto insurance premiums as vehicle use dropped during the COVID-19 shutdowns, alleging that the insurer offered an "inadequate" credit to "penalize" policyholders who don't renew policies.
Geico Casualty Co. was hit with the proposed class action in Illinois state court in late July before it was served on the complaint in early October. The carrier removed the case to federal court on Friday. Geico said the suit should be tossed on various grounds and it is planning to file a dismissal motion in its removal notice.
"If the pandemic lasts another 12 months, plaintiff would be seeking to lessen premiums by as much as an extra 200% of its potential compensatory damages as stated above," Geico said on Friday.
Geico auto policyholders Roxanne Thomas and James Thomas sued the insurer on July 29, alleging that it's charging "grossly excessive" premiums as fewer people drive during state-mandated closures that began in spring.
"Auto insurers' (including Geico's) assumptions about future claims in Illinois became dramatically overstated when, in mid-March of 2020, the state's roads emptied, and the frequency of motor vehicle accidents and insurance claims dropped precipitously and immediately," Thomas said.
"Vehicle miles" from Illinois residents dropped by 65% from March to April, they said, citing data from the Consumer Federation of America. Thomas said many insurers have offered more relief to their policyholders, citing that State Farm companies gave a 25% premium credit to auto policyholders from late March to late May.
But Geico only offered a 15% premium credit to policyholders who are willing to renew the policies, with no relief for Illinois auto policies that are currently in place, they added.
"Geico's premium relief expressly (and unreasonably) conditions premium relief on the policyholder's renewal. Thus penalizing those of its policyholders who choose not to renew their Geico policies," Thomas said.
According to the suit, Geico said on its website on June 8 that it will offer 15% premiums credit if the policy is renewed from April 2020 to April 2021.
"Geico's premium relief compares unfavorably to all or substantially all of the premium-relief programs established by other Illinois auto insurers in response to the COVID-19 crisis," they said.
The two proposed class representatives are looking to represent all Geico auto policyholders in Illinois, alleging consumer fraud and deceptive business practice among others, and seeking damages in a jury trial plus attorney fees.
Representatives from the parties could not be immediately reached for comment on Monday.
The policyholders are represented by Antonio M. Romanucci David A. Neiman of Romanucci & Blandin LLC, and John S. Spadaro of John Sheehan Spadaro LLC.
Geico is represented by Lisa T. Scruggs, Ronald M. Lepinskas, and Damon N. Vocke of Duane Morris LLP.
The case is Thomas et al. v. Geico Casualty Insurance Company, case number 1:20-cv-06453, in the U.S. District Court for the Northern District of Illinois.
--Editing by Amy Rowe.
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