Suing an Auto Insurer for Underpaying on an Accident Claim – Greenberger v. Geico

In previous posts, we’ve explained some of the ways in which car buyers who have been hoodwinked by dealers and manufacturers can seek to get their money back. The Seventh Circuit Court of Appeal’s ruling in Greenberger v. Geico concerns another player in the auto industry accused of fraud: an auto insurance company. The ruling explains that a plaintiff looking to sue an insurance company for breach of contract or fraud for low-balling a damage estimate must have the physical evidence to prove that the money paid by the insurer was not enough to fix the car.

Plaintiff Steven Greenberger sued Defendant Geico, his car insurance carrier, alleging breach of contract, consumer fraud in violation Illinois law and common-law fraud. In 2002, Plaintiff was involved in an auto accident, which left his 1994 Acura with bumper, steering box, suspension and lower body damage. After inspecting the car, a Geico adjuster issued Plaintiff a check for just over $3,000. Plaintiff did not repair the car. An individual later approached Plaintiff about buying the car, but when the potential buyer had it inspected by a mechanic, the mechanic indicated that the car needed more than $5,000 worth of repairs.

Plaintiff filed a proposed class action, claiming that Geico systematically violates its promise to restore policyholders’ vehicles to pre-loss condition by omitting certain necessary repairs from it collision damage estimates. A district court dismissed Plaintiff’s claims.

On appeal, the Seventh Circuit affirmed the lower court’s decision, finding that Plaintiff’s claims are barred by the Illinois Supreme Court’s decision in Avery v. State Farm Mutual Automobile Insurance Co., 216 Ill.2d 100, (2005). In Avery, the Supreme Court held that a policyholder’s suit against his insurer for failing to restore his collision-damaged car to its pre-loss condition cannot succeed without an examination of the car to determine whether the money paid by the insurer to cover the claim is sufficient to repair it. In the present matter, Plaintiff’s car was damaged in an accident; Geico inspected it and issued a check to cover Plaintiff’s insurance claim. Instead of repairing the car, however, Plaintiff donated it to charity. Thus the car was not available for examination.

Avery also established, according to the court, that a fraud claim cannot be simply a reformulated breach of contract claim. In other words, a fraud claim must allege more than simple failure to follow through on a promise. Since Plaintiff’s claims are limited to allegations concerning Geico’s promise to restore damaged cars to pre-loss condition, these are essentially contract claims that cannot also be alleged as fraud.

At Lubin Austermuehle, we are consumer protection lawyers who fight to protect your rights, including your right to payment on your legitimate insurance claim. Centrally located in Chicago and Oak Brook, Illinois, our consumer rights attorneys have decades of experience handling insurance claims – as well as auto fraud – cases against insurance carriers. For a free confidential consultation and evaluation, please call us toll free at 1 630-333-0333, or fill out our intake form on our Contact Us page.

Related blog posts:

Appellate Court Rules that Adding an Arbitration Clause to an Insurance Agreement Does Not Constitute a Change in Coverage under Illinois Law

Improperly Canceled Auto Insurance Policy Means Insurer Has Duty to Defend Driver in Accident, Appeals Court Rules

Dirty Car Salesmen Come Clean

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