© Reuters.

By Jonathan Stempel

(Reuters) – The auto insurer Geico Corp, a unit of Warren Buffett’s Berkshire Hathaway (NYSE:) Inc, should face a proposed class motion claiming it overcharged policyholders because the coronavirus pandemic led to much less driving and fewer accidents, a choose has dominated.

In a choice on Thursday, U.S. District Choose Sharon Johnson Coleman in Chicago mentioned Illinois drivers might attempt to show Geico violated a state client fraud regulation by unfairly and deceptively advertising and marketing its “Geico Giveback” low cost program. She dismissed breach of contract and unjust enrichment claims.

Neither Geico nor its legal professionals instantly responded to requests for touch upon Friday. Attorneys for the plaintiffs didn’t instantly reply to related requests.

Geico had final April supplied policyholders $2.5 billion of credit, together with 15% on renewals from April to October, averaging about $150 per coverage.

However policyholders led by Briana Siegal mentioned this induced them to resume and pay extreme premiums fairly than store round, as stay-at-home orders and closures of companies and faculties resulted in much less time on the street.

Siegal additionally mentioned Geico’s credit in contrast unfavorably with refunds supplied by different insurers.

She cited a report by the Client Federation of America and Middle for Financial Justice awarding Geico’s program a “D-minus,” under the “A” and “B” grades given to State Farm and Allstate Corp (NYSE:), which supplied refunds.

With out ruling on the deserves, Coleman mentioned the plaintiffs adequately alleged that Geico misled them into considering it was passing on all its financial savings from decreased driving, and did not disclose that its premiums have been “not primarily based on an correct evaluation of threat throughout COVID-19.”

Geico’s “loss ratio,” or share of premiums paid to cowl claims, fell to 74.1% in 2020 from 81.3% a yr earlier, and was the bottom since 2007.

Berkshire, primarily based in Omaha, Nebraska, has owned all of Geico since 1996. Geico relies in Chevy Chase, Maryland.

The case is Siegal v Geico Casualty Co et al, U.S. District Court docket, Northern District of Illinois, No. 20-04306.

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