Judge rules against Tesla insurance over ‘inflated’ premiums

Credit: Tesla Insurance

Tesla Insurance will face a class-action lawsuit alleging that the company charged drivers too much for premiums by using “false” crash warnings, after a California judge ruled against the automaker this week.

In a consumer protection lawsuit against the company’s insurance unit, Oakland’s Alameda County Superior Court Judge Brad Seligman rejected Tesla’s request to dismiss the suit, adding that the company must face a prospective class-action suit (via Reuters). The consumer protection suit alleged that Tesla Insurance used incorrect warnings to determine the driver’s safety score rather than using actual driving behavior as the product claims.

Seligman also dismissed a breach of contract claim from plaintiff Ricky Stephens, an Illinois resident, offering him a chance to make changes before moving forward. Stephens originally filed the lawsuit on behalf of Tesla drivers with the company’s insurance in Arizona, Colorado, Illinois, Maryland, Minnesota, Nevada, Ohio, Oregon, Texas, Utah and Virginia.

The suit claims that several Tesla drivers “reported suffering sporadic and random Forward Collision Warnings when there is no danger in sight,” which effectively drops a person’s safety score and increases the premiums they must pay.

Stephens said the false warnings were due to “Tesla vehicles’ still-in-development sensor technology.”

The suit was originally brought forward under California’s unfair competition law, with Stephens seeking restitution, disgorgement of profits and an injunction against false advertising since the insurance program claims it will lower premium costs for good drivers.

A Tesla spokesperson and the insurance arm’s legal team have not responded to requests for comment.

Although the case took place in California, the state is not included in the list since Tesla Insurance is prohibited from using a driver’s safety score to adjust premiums, due to consumer privacy laws.

Upon launching the insurance division in 2019, Tesla said the program would lower premium rates by 20 to 30 percent through the use of real-time driving behavior data which would influence the driver’s safety score. Tesla Insurance has since launched in 12 U.S. states, and job listings suggest that it may even launch in Europe.

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Judge rules against Tesla insurance over ‘inflated’ premiums
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