Federal Judge Certifies Class Action vs. PGAC on Auto Policy Fees

A subsidiary of American Household Insurance coverage now faces a federal class-action lawsuit in Florida, alleging it repeatedly charged auto policyholders a cancellation payment that was by no means talked about within the coverage.

The dimensions of the category can be not less than 100 folks and can embody everybody who was insured beneath Everlasting Basic Assurance’s non-standard auto protection from 2015 to 2020, when the preliminary grievance was filed, U.S. District Decide William Dimitrouleas, of Miami, mentioned in his order final week certifying the category.

The plaintiffs, represented by the Zebersky, Payne, Shaw, Lewenz agency in Fort Lauderdale, and others, cost that the coverage promised to refund 90% of the “pro-rata unearned premium” if the motorist cancels the coverage. As a substitute, Everlasting Basic charged a “brief price cancellation premium” based mostly on the quantity of premiums that had been by no means paid by the insureds, the amended grievance reads.

The go well with gave this instance: Plaintiff Dorine Conner renewed her coverage in 2019 and well timed paid her $259 month-to-month premiums. When she canceled, she anticipated a refund of $240 in unearned premium, minus the ten% as said within the coverage. As a substitute, she was charged an $89 penalty and acquired solely $153 from the insurer.

For an additional driver, Everlasting Basic assessed a penalty of $620 – increased than the policyholder’s month-to-month premium, the go well with alleges. The grievance alleges breach of contract, unjust enrichment by the insurer, and unfair enterprise practices.

The choose discovered that the plaintiff’s movement to certify the case met all of the case legislation necessities for a category.

“The Court docket rejects Defendant’s argument that class certification is inappropriate as a result of ‘not all Plaintiffs have a standard contract,’” the choose famous. “First, the suggestion that the insurance coverage utility, not the coverage, is the contract is a distinction and not using a distinction. It’s the insurance coverage utility and the insurance coverage coverage which collectively represent the contract.”

Non-standard auto insurance policies are short-term insurance policies usually bought by individuals who have issue affording protection by way of commonplace carriers, and cancellations are widespread, the court docket mentioned.

Everlasting Basic has denied the allegations. The service’s attorneys additionally argued that Conner couldn’t symbolize the category as a result of she was convicted of kidnapping in 2001 and served 12 years in jail.

“Primarily based on her serving vital time in jail, Connor doesn’t possess the private traits and integrity to satisfy the fiduciary function of sophistication consultant,” the corporate argued.

The choose mentioned that argument “is wholly with out advantage,” and {that a} legal conviction doesn’t robotically disqualify a category consultant.

This isn’t the primary time that an American Household Mutual Insurance coverage unit has been accused of underpaying.

In February, attorneys in Illinois proposed a category motion in opposition to American Household for allegedly utilizing a “typical negotiation” methodology of figuring out the worth of totaled automobiles. The plaintiffs mentioned the strategy was illegal and considerably undervalued their funds in claims.

That go well with was voluntarily dismissed, with out prejudice, in early April, court docket data present. No rationalization was given.