Nevada Insurance Companies Facing Class Action Lawsuits Over Pandemic Rates

Since the start of the COVID-19 pandemic in March of 2020, many more people have been staying at and working from home to abide by social distancing and quarantine guidelines. This has resulted in a year with far fewer drivers taking their cars out on the road than usual, a trend that is expected to continue as jobs continue to transition to remote settings and the pandemic wears on.

In response, some car insurance companies promised to adjust their rates to reflect how much less their drivers were on the road, lowering prices in a promise to help policyholders save. However, some policyholders have been dissatisfied with these supposed “save the less you drive” measures and have come out in harsh criticism of companies that have not taken steps to adjust their rates at all.

In Nevada, multiple class action lawsuits were filed against 10 major car insurance companies.

These lawsuits share one primary allegation in common: the insurance companies are charging “excessive premiums” in violation of state law, particularly Nevada’s Deceptive Trade Practices Act. Additionally, these lawsuits claim that the discounts offered by the companies promising to take into consideration the pandemic traffic changes do not provide “any meaningful relief”, instead serving as an empty gesture meant to placate policyholders.

Despite the dramatic reduction in accident claims as a result of limited driving, the plaintiffs allege that the insurance provider’s rates have not been similarly reduced. These class action complaints accuse the named insurance providers of breach of contract as well as insurance bad faith.

Insurance bad faith occurs when an insurance provider treats a policyholder unfairly.

Bad faith generally refers to an insurance provider’s unfair denial or reduction of an otherwise valid claim. In this string of lawsuits, bad faith seems to refer more specifically to the minor credits and refunds these insurance companies are offering to “compensate” policyholders during the pandemic, rather than significantly reducing their premium rates; a step that many drivers in Nevada and across the country believe is sorely called for. The insurance companies named in these lawsuits include State Farm, USAA, Geico, Acuity, Liberty Mutual, Farmers, Progressive, Travelers, Nationwide, and Allstate. USAA was one of the first to respond to the lawsuits, pointing out that in 2020, they returned over $1 billion in dividends to policyholders due to driving habit changes during the pandemic.

Legal counsel working on these lawsuits have expressed predictions that similar lawsuits will follow in other states. Based on a general agreement from consumers across the country that insurance providers have not provided adequate relief to policyholders, this prediction carries some weight. Plaintiffs in the Nevada lawsuit are seeking compensatory and punitive damages to discourage insurance providers from conducting themselves similarly in the future.