EV giant Tesla Inc TSLA has been ordered to face a prospective class action lawsuit alleging that the company’s car insurance unit charged inflated premiums based on ‘false’ crash warnings.
What Happened: Judge Brad Seligman of Alameda County Superior Court rejected Tesla Insurance Services Inc.’s request to dismiss the lawsuit, Reuters reported.
The lawsuit claims that Tesla Insurance unfairly calculated premiums based on false crash warnings rather than the driver’s actual conduct on the road. Ricky Stephens, an Illinois resident and the plaintiff in this case, initiated the lawsuit on behalf of Tesla drivers in 11 different states. Stephens asserts that Tesla’s sensor technology issued incorrect collision warnings that negatively affected safety scores and thus led to increased insurance premiums.
Why It Matters: The company launched the insurance service in 2019, with CEO Elon Musk claiming that it would be significantly better than other car insurance providers.
The new class action lawsuit aims to seek restitution and an injunction against the alleged false advertising, in addition to the disgorgement of profits. A preliminary hearing has been scheduled for January.
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