A federal judge has allowed a lawsuit against Geico Corp. to proceed as a class action. The claim is that Geico overcharged more than two million California drivers for car insurance in the early months of the COVID-19 pandemic.
At the start of the pandemic, some of the most severe lockdowns went into place. This led to forced behavioral changes of Americans throughout the country. For drivers, it meant leaving a car sitting in the garage, used only for occasional trips to the grocery store.
This lack of activity significantly lowered the risk of collision. Even during the times a person was on the road, there was very little traffic. Insurers are expected to provide discounts or refunds in cases like these. In fact, there are a number of car insurance discounts available to low-risk drivers in normal times as well.
Geico did in fact offer some relief. They provided $2.5 billion to policyholders. However, they provided this in the form of credits, including discounts on renewals. The class action lawsuit claims that what they provided fell well short, based on what they reaped due to the drastic reduction in payouts.
What has Geico said?
For its part, Geico is fighting back against this class action. Previously, the firm had contended that a group lawsuit would create insurmountable manageability problems. The U.S. District Judge who allowed the class action to proceed – Beth Labson Freeman of San Jose – rejected this claim.
Freeman asserted that a class action would be better than individual lawsuits, with the damages model provided by the plaintiffs potentially “[presenting] an appropriate percentage refund over a sufficiently long time” to address manageability concerns.
Geico has also made other claims as to the validity of the class action. They have said it cannot account for differences among policyholders. There is a basis for this, considering that different parties have been insured for vastly different periods of time. They have also stated that there would be major difficulties in retroactively assessing damages, isolating pandemic costs, and adjusting rates.
Can they win?
A major challenge that Geico faces is in their own promises made during the early days of the pandemic. They claimed that their credits program would provide “substantial and full relief.” While the terms used are vague, that may work in favor of the plaintiffs. It is difficult for a company to claim to have provided this relief if such a large number of policyholders reject it.
That being said, Geico may be able to win this lawsuit. Similar lawsuits have been brought against them in Chicago and Manhattan. While the Chicago lawsuit is ongoing, an appeals court upheld a judge's dismissal of the lawsuit in Manhattan.
Who is Geico?
If you're unfamiliar with Geico’s roots, the company is a part of Warren Buffett’s Berkshire Hathaway Inc. Berkshire has owned Geico in its entirety since 1996. Berkshire is based in Omaha, Nebraska, while Geico is based in Chevy Chase, Maryland.
FAQs
(Reuters) - Geico, the car insurer owned by Warren Buffett's Berkshire Hathaway, will not face class-action claims as it defends against a lawsuit alleging it overcharged policyholders early in the COVID-19 pandemic, a federal judge ruled on Tuesday.
How to negotiate a settlement with GEICO? ›
Tips & Tactics for Negotiating A Settlement With GEICO
- Refuse The Recorded Statement. ...
- Get Medical Treatment Immediately After The Car Accident. ...
- Don't Let The GEICO Adjuster Minimize Your Injuries. ...
- Don't Agree To Anything Without First Consulting With A Lawyer. ...
- Don't Ever Agree To GEICO's First Offer.
Geico must face California class action claiming it overcharged on car insurance. Oct 31 (Reuters) - A federal judge on Monday said a lawsuit accusing Geico Corp of overcharging more than 2 million California policyholders on car insurance early in the COVID-19 pandemic may proceed as a class action.
Why is my GEICO insurance all of a sudden so much higher? ›
Geico is far from the only insurance company that's increasing rates. Across the board, a few factors are making companies increase premiums: Increasing labor and material costs are making repairs more expensive. Rising medical healthcare costs are making treatment for injuries more expensive.
Why is GEICO in trouble? ›
Less driving during the pandemic contributed to Geico's "loss ratio," or percentage of premiums paid to cover claims, falling in 2020 to a 13-year low. The insurer later suffered six consecutive quarters of underwriting losses, but has since rebounded by tightening standards and reducing policies in force.
How much will I get from a GEICO class action lawsuit? ›
Members in the class action lawsuit against Geico can receive payment for unpaid regulatory fees and unpaid sales taxes. As listed on the settlement website, individual payments may be $2,051.98 on average, with some members receiving higher or lower payments.
How do I counter offer an auto insurance settlement? ›
Rather, ask why the adjuster has provided this extremely low figure. You should then write a formal letter of response in which you state that you don't find the initial low settlement offer acceptable, listing the reasons why and concluding with a demand for a higher settlement offer.
What is the GEICO lawsuit about? ›
On March 25, 2021, class claims were filed in California federal court in the Northern District of California San Jose Division, against insurance giant GEICO General Insurance Company (“GEICO”) alleging that GEICO unfairly profited from the COVID-19 pandemic.
Can you negotiate rate with GEICO? ›
If you're wondering if you can negotiate auto insurance rates, the short answer is no. States regulate car insurance costs, so you can't ask your insurer to give you a lower price.
Is GEICO hard to deal with? ›
Filing an insurance claim with Geico can be challenging, especially if the insurance adjuster is refusing to offer you a fair settlement.
How to lower my car insurance rates
- Add multiple cars to your policy: Adding multiple cars to your insurance policy can often lead to lower rates through multi-vehicle discounts.
- Bundling auto and home policies: We offer bundling discounts for loyal customers who purchase multiple policies through GEICO.
Your insurance rate won't go up as a result of your first otherwise surchargeable, at-fault accident. Subsequent occurrences do not qualify for Accident Forgiveness. Accident Forgiveness eligibility is determined by your specific policy type, as well as your state laws and regulations.
Why did my car insurance go up in 2024? ›
With increasing costs across various parts of the automotive industry, from higher average repair costs to continuing supply chain issues, auto insurance companies have needed to raise rates to turn a profit.
Is GEICO overcharging? ›
(Reuters) - Geico, the car insurer owned by Warren Buffett's Berkshire Hathaway, will not face class-action claims as it defends against a lawsuit alleging it overcharged policyholders early in the COVID-19 pandemic, a federal judge ruled on Tuesday.
Why is GEICO closing? ›
The Chronicle reports that insurance industry magazines linked Geico's decision to close California sales offices to its failure to raise insurance prices in compliance with Sacramento regulations and other market forces.
Who bought out GEICO insurance? ›
In 1996, GEICO became a wholly owned subsidiary of Berkshire Hathaway, headed by Warren Buffett, one of the country's most successful investors.
How do you negotiate a successful settlement? ›
The following guidelines can help you settle out of court and reach creative, mutually beneficial resolutions to your disputes, with or without lawyers at the table.
- Make sure the process is perceived to be fair. ...
- Identify interests and tradeoffs. ...
- Insist on decision analysis. ...
- Reduce discovery costs.
You can negotiate your debts with your creditors directly or hire a debt settlement company to negotiate on your behalf. Settling debts comes with serious consequences, including a lower credit score and higher income tax liability, so it should not be taken lightly.
How long does it take for GEICO to send a settlement check? ›
Geico reports they usually send settlement money within six months of receiving an injury claim.
