Massachusetts Court Upholds Lawsuit Over Insurer’s Weather Event Coverage Restriction

A Massachusetts policyholder has initiated a putative class action lawsuit against Progressive Direct Insurance Company for refusing to offer optional collision and comprehensive auto insurance coverage during a declared weather emergency in December 2023. The insurer invoked a 'binding restriction,' a temporary freeze on issuing certain coverage during major weather events, to deny the plaintiff this coverage, offering only liability insurance. However, Massachusetts law under Chapter 90, Section 34O requires insurers to offer collision coverage unless certain statutory exceptions apply, which were not relevant in this situation. The plaintiff, Danielle Gondola, later had her vehicle totaled in an accident and was denied a claim by Progressive, prompting her to file suit alleging unfair insurance practices under Chapters 93A and 176D along with breach of contract and breach of covenant of good faith and fair dealing. Superior Court Judge Debra A. Squires-Lee rejected Progressive's motion to dismiss, stating the plaintiff's claim under Chapter 93A was adequately stated, as Progressive's defense rested on unsubstantiated binding restrictions not authorized or approved by the Massachusetts Commissioner of Insurance. The ruling highlights the tension between insurer national policies and local regulatory compliance, as Progressive had implemented statewide binding restrictions during a localized flood event without legal basis. Legal experts suggest this case could signal increased scrutiny on insurer underwriting practices and adherence to state mandates around optional coverages. The case draws parallels to prior Massachusetts litigation involving Progressive's policy selling practices, underscoring regulatory and consumer protection challenges in the auto insurance market. The decision could encourage further class actions against insurers relying on ambiguous internal restrictions to limit coverage offerings illegally. Progressive's position that the binding restriction practice is industry standard lacks support under Massachusetts law, as noted by the presiding judge. The ruling reinforces statutory obligations for auto insurers in Massachusetts to offer optional physical damage coverage consistently and transparently, especially during emergencies or weather events when coverage needs may be heightened. As this litigation progresses, it may impact how insurers manage policy offerings in declared emergencies and clarify permissible scope for underwriting restrictions. Insurance professionals and legal practitioners are advised to monitor developments as they bear implications for compliance risk, claims handling, and consumer protection frameworks in the auto insurance sector.