A federal judge said Monday that a lawsuit in which Geico Corp. is accused of overcharging more than 2 million California policyholders for auto insurance early in the COVID-19 pandemic could pass as a class action.
U.S. District Judge Beth Labson Freeman in San Jose, California, rejected Geico’s claim that a class action lawsuit over the alleged inadequacy of the “Geico Giveback” program would create “insurmountable administrative difficulties.”
Geico, part of Warren Buffett’s Berkshire Hathaway Inc., said a class action would not adequately account for differences between policyholders, including the time periods they were insured.
The in Chevy Chase, Md. incumbent insurer also said it would be difficult to assess damages, isolate pandemic costs and adjust rates retroactively.
But the judge said a class action lawsuit was preferable to individual suits, and that the plaintiffs’ damages model “could provide an appropriate rate over a sufficient period of time” to address management concerns.
Geico attorneys did not immediately respond to requests for comment. Plaintiffs’ attorneys did not immediately respond to similar requests.
Policyholders objected to Geico’s decision to extend $2.5 billion in credits as of April 2020, including 15% on renewals, reflecting how people were driving and getting into accidents less often at the time.
They said Geico reaped a “windfall” because its credit was “far behind” given reduced risks, and accused the insurer of falsely claiming its credits provided “substantial and complete relief.”
Some insurers, including State Farm and Allstate Corp., offered pandemic-related refunds to policyholders.
The class covers California residents who purchased Geico auto, motorcycle or RV insurance between March 1, 2020 and now.
Geico is defending a similar federal lawsuit in Chicago, and in May persuaded a Manhattan appeals court to uphold a judge’s dismissal of a similar lawsuit there.
Based in Omaha, Nebraska, Berkshire has owned all of Geico since 1996.
The case is Day v. Geico Casualty Co et al, U.S. District Court, Northern District of California, No. 21-02103.
(Reporting by Jonathan Stempel in New York; editing by Marguerita Choy)
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