By Mike Scarcella

Dec 4 (Reuters) – Tesla’s TSLA.O car insurance unit must face a prospective class action claiming it overcharged drivers for their premiums by basing them on “false” crash warnings instead of actual driving behavior, a California judge has ruled.

Oakland-based Judge Brad Seligman of Alameda County Superior Court in an order on Friday denied Tesla Insurance Services Inc’s bid to dismiss the consumer protection lawsuit, which was brought under California’s sweeping unfair competition law.

A spokesperson for Tesla and lawyers representing the insurance subsidiary did not respond to messages requesting comment.

Tesla launched the unit in 2019 with a promise by Tesla chief Elon Musk to provide “vastly better” service than other auto insurers.

A Reuters special report published last month detailed how numerous complaints about Tesla Insurance had drawn scrutiny from state regulators and plaintiffs’ lawyers.

Fremont, California-based Tesla Insurance has denied misleading consumers. In a partial win for the company, Seligman on Monday agreed to dismiss a breach of contract claim from the plaintiff, Illinois resident Ricky Stephens, but gave him a chance to amend it.

An attorney for Stephens did not respond to a request for comment.

Stephens filed the lawsuit on behalf of Tesla drivers in Arizona, Colorado, Illinois, Maryland, Minnesota, Nevada, Ohio, Oregon, Texas, Utah and Virginia.

Tesla offers insurance that relies on real-time driving behavior for four models of the company’s cars.

The company says insurance premiums are based on several factors, including a “safety score” that includes an assessment of vehicle data for such things as hard-braking, “aggressive” turning and “forward collision warning alerts.”

Numerous Tesla drivers have “reported suffering sporadic and random Forward Collision Warnings when there is no danger in sight,” which affects their safety score and drives up their premiums, the complaint said.

Stephens has blamed erroneous collision warnings on “Tesla vehicles’ still-in-development sensor technology.”

The complaint is seeking restitution, disgorgement of profits and an injunction against alleged false advertising.

Stephens’ lawyer said in a court filing that “an injunction here would simply require defendant to make sure that its advertising is accurate, and to take steps to make sure that it doesn’t factor in driving events that never happened.”

An initial hearing in the case is scheduled for January.

The case is Ricky Stephens v. Tesla Insurance Services, Alameda County Superior Court, No. 23CV031800.

Read more:

Tesla launched its own car insurance. These drivers say it’s a lemon.

Tesla beats lawsuit claiming it monopolizes repairs, parts

US judge says Tesla privacy case belongs in arbitration, not court

Tesla gets US assist in lawsuit challenging Louisiana direct-sales ban

(Reporting by Mike Scarcella)

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Original: TSLA Feed: Tesla insurance unit must face lawsuit over ‘inflated’ premiums, judge rules