Farmers Insurance Reaped ‘Windfall’ During Lockdowns, Says Class Action Lawsuit

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A California man says that Farmers Insurance Exchange unfairly benefitted from the global COVID-19 pandemic by failing to issue sufficient refunds to policyholders despite a dramatic reduction in driving during lockdowns.  

Lead plaintiff, Daniel De Sloover, wants to represent others who paid Farmers Insurance premiums during the pandemic in his class action lawsuit filed in California federal court Monday. De Sloover accuses Farmers of “unfairly profiting” from Class Members suffering financially due to social distancing measures enacted during the COVID-19 pandemic.  

De Sloover, a resident of Alameda, Calif., says that he held a Farmers car insurance policy as the COVID-19 pandemic hit. He says that he maintained that policy because he was unaware of the excessive profits enjoyed by Farmers during California’s lockdowns. De Sloover says that Farmers, along with other insurance companies, are well aware of the financial gains they made and refunds they owe to consumers, but refuse to pay.  

“Although businesses across the United States have almost uniformly suffered as a result of COVID-19, state-wide stay-at-home orders, and other social distancing measures, the auto insurance industry has benefited,” alleges the class action lawsuit. “In fact, auto insurance—a $250 billion industry— stands to secure a windfall from COVID-19-related restrictions.” 

De Sloover points out that between mid-March and the end of April, driving rates dropped precipitously – by 77 percent in the midst of the first COVID-19 lockdowns. Despite the drop in driving rates, which resulted in fewer auto accidents requiring insurance coverage, Farmers continued to collect premiums from policyholders.  

The class action lawsuit notes that though the insurance company offered credits for premiums paid during April and May of 2020, the program was “short-lived” and “woefully inadequate.” De Sloover says that one conservative study found that policyholders are due at least 30 percent of their car insurance premiums paid between March and May of 2020.  

However, Farmers has only offered between 15 and 25 percent credits for April and May and has failed to offer any further refunds, says the class action lawsuit.  

De Sloover says that he and other Farmers Insurance policyholders would not have renewed their policies had they known that the company was experiencing a financial windfall during the coronavirus pandemic. He wants Farmers to disgorge their ill-gotten gains and provide refunds to Class Members.  

Do you think Farmers should have adjusted its insurance rates during coronavirus lockdowns? Tell us in the comment section below! 

The plaintiff is represented by Melody L. Sequoia of The Sequoia Law Firm, Matthew C. Helland, Matthew H. Morgan, Robert L. Schug, and Chloe A. Raimey of Nichols Kaster, LLP, and Ryan F. Stephan, James B. Zouras, Teresa M. Becvar, and Catherine T. Mitchell of Stephan Zouras, LLP.  

The Farmers Insurance Class Action Lawsuit is De Sloover v. Farmers Insurance Exchange, Case No. 3:21-cv-04725 I the U.S. District Court for the Northern District of California San Francisco/Oakland Division.  

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