Class Action Lawsuit Alleges Direct Auto Sells ‘Worthless’ Insurance

On July 11, Direct General Insurance Agency of Tennessee d/b/a Direct Auto Insurance was hit with a class action lawsuit accusing it of selling “worthless” car insurance policies to low-income minorities.

Plaintiff Norbert May filed the class action lawsuit, which alleges Direct Auto took advantage of low-income minorities by offering car insurance at premiums that were significantly lower than those of its competitors. The insurer profits from the premiums but refuses to honor claims, the insurance fraud class action lawsuit says, making the insurance policies worthless to the policyholders.

“Direct Auto Insurance Company developed a business strategy wherein the company planned to secure customers by offering auto insurance at premiums that were substantially lower than its competitors and market rates,” the insurance scam class action lawsuit says.

According to the Direct Auto class action lawsuit, “Direct Auto Insurance Company intentionally targeted consumers with low to moderate incomes, including a high percentage of African-American and Hispanic individuals, who did not have the financial ability to hire legal representation to defend them” against the insurer’s allegedly predatory practices. May alleges the insurer had no intention of paying claims.

“As part of its business strategy, Direct Auto Insurance Company planned to challenge claims made by its policyholders through filing of declaratory judgment actions,” the insurance scam class action lawsuit says. “Direct Auto Insurance Company knew that many of its policyholders could not afford legal representation and would not challenge the declaratory judgment actions in court.”

In the Direct Auto class action lawsuit, May argues that the practice of filing “meritless” declaratory judgment actions based on alleged misrepresentations in the insurance policy applications indicates that Direct Auto never intended to honor the claims.

The insurance scam class action lawsuit accuses Direct Auto Insurance of violating the Illinois Consumer Fraud and Deceptive Practices Act by offering consumers artificially low insurance premium prices to induce them to purchase the policies, even though the insurer never intended to honor their claims.

May seeks certification of the Direct Auto Insurance class action lawsuit, plus damages for fraud, breach of contract and alleged violations of the Illinois insurance code.

May is represented by Edward McCauley of Kelleher & Buckley and Daniel Konicek of Konicek & Dillon.