A class-action lawsuit against EV giant Tesla, challenging its car insurance product, can move forward, an Alameda County Superior Court judge has ruled.

Illinois resident Ricky Stephens filed the lawsuit in April on behalf of Tesla owners who also have Tesla insurance in states where Tesla sells coverage. The suit charges that false or incorrect collision warnings from the vehicles’ sensors created inaccurate safety scores that pushed up insurance premiums.

Tesla insurance

Tesla launched its telematics-based insurance program in 2019 and currently sells coverage to Tesla owners in Arizona, California, Colorado, Illinois, Maryland, Minnesota, Nevada, Ohio, Oregon, Texas, Utah, and Virginia. Tesla’s insurance product relies on real-time driving behavior data, gathered by technology already in place in all Model S, Model 3, Model X, and Model Y vehicles.

Tesla says premiums are based on the vehicle, location, miles driven, selected coverages, and the vehicle’s monthly safety score, which assesses driving behavior based on several metrics.

Lawsuit allegations

The lawsuit charges that Tesla overcharged drivers by factoring false crash warnings into the safety score that determines premiums. Reuters reported that the complaint states many Tesla drivers have said they experienced forward-collision warnings when no danger was apparent.

The false warnings lower safety scores and lead to higher insurance premiums, the lawsuit stated. Because the safety score can change from month to month, Tesla insurance premiums can also change on a monthly basis.

The lawsuit seeks restitution, profit information, and an injunction against false advertising, Reuters reported.

What’s next

Judge Brad Seligman rejected a motion by Tesla Insurance to dismiss the lawsuit, paving the way for the class action to move forward in the California court system. An initial hearing is scheduled for January.

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Tesla Insurance Must Face Class Action Suit, Judge Rules

Suit alleges Tesla ‘false’ crash warnings inflated premiums.