Two California Lyft passengers claim Allstate charged riders for mandatory coverage while engineering policies to deny claims.
A lawsuit filed this week in federal court accuses Allstate Insurance Company and its subsidiary North Light Specialty Insurance Company of running what plaintiffs call a "bait-and-switch" operation that generated profits by selling California rideshare passengers illegal insurance coverage designed to evade coverage obligations.
Bruno Llerena and Christopher Roselli filed the proposed class action November 18 in the Northern District of California, alleging the insurance companies knowingly violated state law from October 1, 2020 through October 1, 2022 by crafting Transportation Network Company policies for Lyft that appeared to provide the required one million dollars in uninsured motorist coverage while actually excluding claims through unlawful provisions.
The allegations center on how North Light handled the intersection between California's mandatory rideshare insurance and Proposition 22's occupational accident insurance requirement. According to the filing, North Light created policy language stating it would not pay for any losses if a person was "entitled to receive payment" under occupational accident insurance, effectively excluding coverage for medical expenses and lost wages.
California law requires TNC insurance to be primary and cover all sums an insured can legally recover as damages. The plaintiffs argue North Light's policy contradicted this requirement, making coverage secondary to other insurance and categorically excluding economic damages based on the existence of occupational accident coverage, regardless of whether that coverage actually paid.
The plaintiffs point to specific policy language they say proves the scheme. One provision allegedly states the insurer will pay only "in excess of all other valid and collectible insurance" despite state law requiring primary coverage. Another provision allegedly excludes payment for losses if someone is eligible for occupational accident benefits, even though California law only permits offsets for benefits actually provided.
The lawsuit suggests the illegal design gave North Light a competitive advantage. By reducing potential claim exposure through unlawful exclusions, the insurer could offer Lyft lower premiums, the plaintiffs claim, while passengers funded the coverage through ride fees that Lyft has calculated can reach up to six dollars per trip in California.
Adding to concerns, North Light operates as a surplus lines insurer, meaning it sits outside California's regular insurance regulatory framework and does not participate in the California Insurance Guarantee Association. The filing argues this means policyholders have no state-backed safety net if the insurer becomes insolvent.
The case also names Allstate directly, arguing the parent company conceived and directed the scheme. The plaintiffs cite shared executives, office space, and email systems as evidence Allstate controlled North Light's operations, with Allstate Vice President John Moran serving as President of North Light.
The proposed class could include California residents who paid for Lyft rides during the two-year period. The plaintiffs note that Lyft operated throughout California during this time, suggesting substantial class numbers, though exact figures would be determined through discovery.
The plaintiffs are seeking declarations that the policy violates California law, restitution of premiums paid, compensatory damages, and punitive damages for what they characterize as deliberate misconduct involving malice, oppression, and fraud.
The case is Llerena v. Allstate Insurance Company, Case No. 3:25-cv-09915. No determination has been made on the allegations.
