Three former policyholders filed a federal lawsuit Monday against Geico, alleging that the company discriminates against blacks by using education and employment status to rate customers' risk.

The suit, for which the plaintiffs seek class action status, was filed in the U.S. District Court for the District of Minnesota in Minneapolis.

Geico, based in Chevy Chase, Md., did not return a call for comment.

According to the complaint, customers with less education and who hold occupations that require no more than a high school diploma are considered a greater risk–and thus charged higher premiums–than customers with more education.

The plaintiffs allege that instead of correlating with risk, these factors correlate with race and therefore the company's use of them constitutes racial discrimination. In addition, the complaint charged the company has hidden these criterions as rating factors in filings with regulators.

The plaintiffs are asking the court to declare Geico's policy and practice discriminatory and to issue an injunction prohibiting the use of occupation and level of education as factors in the carrier's underwriting policies. The plaintiffs are also seeking monetary relief to redress the alleged discrimination.

“Geico exploits the racial divide in America by linking its auto insurance rates to the levels of education and occupations of its policyholders,” said Joseph M. Sellers, a partner with Cohen, Milstein in Washington who represents the plaintiffs.

Last month, the Consumer Federation of America and a New Jersey not-for-profit auto insurer made similar allegations against the company.

In a March 17 letter to the National Association of Insurance Commissioners, Geico legislative counsel Hank Nayden said the company's rating practices are “fundamentally fair and actuarially sound,” and any attempt to link them to racial bias is offensive and false.

Birny Birnbaum, executive director for the Center for Economic Justice in Austin, Texas, who has been a longtime critic of insurers' use of credit records to rate customers, said any criteria involving economic status are obnoxious.

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Geico Sued For Racial Bias In Rating

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