Auto Insurers' COVID-19 Relief Falls Short, Drivers Claim

By Mike Curley
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Law360 (July 31, 2020, 4:03 PM EDT) -- Groups of drivers are suing several auto insurance companies, including Progressive Universal Insurance Co., Geico Casualty Co. and Allstate Fire and Casualty Insurance Co., in Illinois state court, saying the companies have fallen far short of offering adequate relief to policyholders who have overpaid their premiums after COVID-19 emptied the state's roads.

In four complaints filed on Wednesday, the Illinois drivers take aim at Progressive, Geico, Allstate and American Family Insurance Co., saying they deserve more relief than those companies are offering, particularly compared to what other companies are giving their customers.

The insurance premiums are based in part on the claims the insurance companies expect to pay out, but with the pandemic closing businesses and people traveling far less, those expectations turned out to be high, according to the suits.

The complaints cite information from the Consumer Federation of America, which reported that the vehicle miles traveled in Illinois dropped by as much as 67% since shutdowns began in March.

"As a result of COVID-19 restrictions, auto insurers' [including Progressive'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," one complaint says. "This rendered the premiums charged by Progressive to its Illinois policyholders grossly excessive, not only for new policyholders going forward but also for existing policyholders whose premiums were based on the overstated and obsolete claim projections."

While each company in the suits has offered a rebate or discount of some sort, the drivers say they don't do enough compared to companies like State Farm, which has offered policyholders a 25% credit on premiums from March to May.

Progressive, by contrast, offered 20% credit on premiums for April and promised future credits on subsequent months, according to that complaint.

Geico offered existing policyholders a 15% credit on premiums for auto policy renewals that happen between April 2020 and April 2021, while offering nothing for premiums that have already been paid during the pandemic, according to the complaint against Geico.

In the complaint against Allstate, the drivers allege it offered a 15% credit on premiums for April, May and June, and the complaint against American Family alleges the company gave an "arbitrary" one-time payment of $50 and a 10% credit on premiums in force between July and December of this year, with no relief for May or June payments.

These offers are designed not to grant relief to drivers who have been overcharged but to secure a windfall for the companies, allowing them to keep the premiums that were "grossly excessive" because of the pandemic, according to the complaints.

The drivers in each case seek to represent the companies' Illinois policyholders and are seeking unspecified damages for the alleged bad faith and deceptive business practices.

"The current COVID-19 refunds given by insurance companies have been relatively meager and are simply a marketing ploy," David A. Neiman of Romanucci & Blandin LLC, representing the drivers, told Law360 on Friday. "The truth is that during the pandemic there was a vast reduction in the number of miles driven by Illinois drivers and most cars were parked in garages with full premiums being paid. Consumers deserve to have the scales re-balanced and have billions of dollars put back into their pockets."

Representatives for the companies could not immediately be reached for comment Friday.

The drivers are represented by Antonio M. Romanucci and David A. Neiman of Romanucci & Blandin LLC and John S. Spadaro of John Sheehan Spadaro LLC.

Counsel information for the insurance companies was not available Friday.

The cases are Kopsaftis et al. v. Progressive Universal Insurance Co. et al., case number 2020CH05162, Thomas et al. v. Geico Casualty Co., case number 2020CH05163, Anagnos et al. v. Allstate Fire and Casualty Insurance Co., case number 2020CH05164, and Ridings v. American Family Insurance Co., case number 2020CH05165, all in the Circuit Court of Cook County.

--Editing by Janice Carter Brown.

Update: This story has been updated with comment from the drivers' attorney.

For a reprint of this article, please contact reprints@law360.com.

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