Can an auto insurer in Massachusetts refuse to offer collision and comprehensive coverages during a flood warning despite a state law that makes it mandatory to offer such coverages?
The industry and public are on the road to finding out. A Massachusetts trial court judge has allowed a purported class action against Progressive Direct Insurance Co. to proceed, denying the insurer’s motion to have the complaint dismissed.
On November 25, Superior Court Justice Debra A. Squires-Lee ruled that unfair insurance practices claims may proceed against Progressive while breach of contract allegations cannot.
On December 20, 2023, Danielle Gondola sought insurance coverage from Progressive for two cars. Progressive provided a six month term policy on December 20, 2023. During the sale, although Gondola requested and would have purchased optional collision and comprehensive coverage, Progressive declined to provide first-party physical damage coverage including collision and comprehensive coverage, even though neither Gondola nor her vehicles fell within any of the exemptions for such coverage.
Progressive maintains that it refused to offer collision coverage because of a “binding restriction.” Progressive indicated that it temporarily halts the sale of optional damage coverage during weather events or emergencies. According to Progressive, when Gondola sought her policy there was a National Weather Service flood warning for her area.
Gondola purchased a policy without those coverages for her 2022 Mazda CX-30 for an assessed premium of $931.00. On January 10, 2024, she was involved in a three-car collision that caused physical damage to her vehicle resulting in a total loss.
Gondola reported the claim to Progressive, which denied the claim and did not indemnify her for the loss.
In her complaint the plaintiff alleges that insurers in the Commonwealth must offer all customers collision and comprehensive coverage and can refuse such coverage only in certain circumstances concerning high-risk drivers. She alleges that Progressive’s failure to provide collision and comprehensive coverage based on a “binding restriction” violates the state’s Chapter 93A consumer protection law that prohibits “unfair or deceptive” business practices and allows consumers and businesses to seek up to triple damages.
The state law (G. L. c. 175, § 113H) governing categories of drivers who have difficulty obtaining coverage because they are high-risk says that insurers are not obligated to provide certain optional coverage to certain categories of drivers, including those convicted of motor vehicle homicide, and those “involved in four or more accidents in which such person has been deemed to be at fault in excess of fifty percent within” the prior three years.
Gondola relies on G. L. c. 175, § 113H to argue that it provides the only exceptions to an insurer’s statutory obligation to provide optional collision and comprehensive coverage. However, she is not suing under that law. Instead she brought breach of contract claims as well as unfair insurance practices claims under the 93A consumer protection law. She bases her claims on Progressive’s refusal to offer optional coverage because of “un undefined, undisclosed binding restrictions,” and on the insurer allegedly misrepresenting the terms of coverage.
Over Progressive’s objection, Judge Squires-Lee found that Gondola has alleged facts sufficient to plausibly suggest violation 93A, which defines unfair insurance practices to include: “misrepresenting the benefits, advantages, conditions, or terms of any insurance policy;” and “misrepresenting pertinent facts or insurance policy provisions” relating to coverages.
“[O]n this record,,” the judge wrote, “I cannot conclude Plaintiff has not stated a straightforward claim under 93A, § 9 where, as alleged, Progressive refused to provide coverage it was obligated by law to offer by misrepresenting its reliance on a ‘binding restriction.'”
Progressive’s assertion that it is not obligated to offer optional coverage and that binding weather restrictions are commonplace and/or approved by the Commissioner or Insurance is not supported, the judge continued. “Chapter 93A is always evolving and must be applied in wholly new situations because it is a “statute of broad impact which creates new substantive rights and provides new procedural devices for the enforcement of those rights,” she explained.
While the judge let the consumer protection allegations proceed, she denied the breach of contract claims because Progressive declined to offer optional coverage before the parties entered the contract of insurance. “Because Progressive did not offer those coverages, Plaintiff did not accept them, and Progressive therefore cannot be liable in contract for breach of them. Put elsewise, Progressive cannot have breached a contract in advance of its formation. With no plausible suggestion of breach, both contract-based claims must fail,” the ruling states.
The judge further explained that while Progressive maintains that it may lawfully refuse to offer optional coverage during a “binding weather restriction,” she cannot consider facts asserted outside the pleadings and the insurer has offered “no law, regulation, or guidance from the Commissioner of Insurance” that such a restriction is acceptable. “It may well be. I understand the logic of not offering comprehensive coverage during a hurricane, for example. But I cannot dismiss this case applying the appropriate standard, on that basis,” she concluded.
Topics Carriers Auto Flood Massachusetts
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