New Jersey recovers more than $10.5 million for GEICO customers overcharged for auto insurance
NEW JERSEY — More than 15,000 New Jersey auto insurance policyholders were affected by improper business practices involving GEICO, prompting the state to recover more than $10.5 million in overcharged premiums and impose a $1.2 million penalty against the insurance company and its affiliates.
The New Jersey Department of Banking and Insurance announced Wednesday that the enforcement action followed a market conduct examination launched in September 2024 in response to consumer complaints about GEICO’s business practices.
According to the department, the investigation uncovered a systemic pattern of improper practices involving multiple GEICO companies, including charging customers higher rates than those previously approved by state regulators.
The department said GEICO voluntarily began issuing refunds during the examination as errors were identified.
“Consumer protection is at the heart of our mission here at the Department of Banking and Insurance, and we will continue to work aggressively to end bad business practices that are harming New Jersey consumers,” said Acting Commissioner Susan Ochs. “This penalty settlement and the corresponding refunds to policyholders demonstrate our commitment to fostering the trusted, accountable, healthy marketplace that will best serve New Jerseyans.”
Investigation identifies multiple violations
The department’s Market Conduct Examinations Unit, part of the Office of Consumer Protection Services, began reviewing GEICO’s operations in September 2024 after receiving consumer complaints.
The examination involved Government Employees Insurance Company, GEICO Secure Insurance Company, GEICO Choice Insurance Company, GEICO Indemnity Company and GEICO Casualty Company.
State regulators identified improper practices in four areas: charging premiums higher than approved rates, canceling insurance policies for improper reasons, failing to include required language in notices that could lead to policy nonrenewal and failing to inform certain vehicle owners of their rights following total-loss settlements.
The last finding involved policyholders whose vehicles were declared total losses but who chose to retain their vehicles after receiving insurance settlements.
According to the department, the examination found that GEICO failed to properly inform those customers of their rights under state requirements.
The department subsequently issued an examination report outlining its findings and recommending corrective changes to company procedures that negatively affected consumers or failed to comply with New Jersey insurance laws.
As part of the enforcement action, GEICO and its affiliates were assessed a $1.2 million penalty. The department also reported the return of more than $10.5 million in improperly charged premiums to affected policyholders.
State says enforcement protects insurance consumers
The Department of Banking and Insurance said the examination reflects its increased focus on holding insurance companies accountable for practices that harm consumers, particularly as affordability remains a concern.
The Market Conduct Examinations Unit reviews insurance companies and agencies to determine whether their operations comply with state insurance laws and whether consumers, medical providers and other members of the public are being treated fairly.
The unit examines life, health, managed care, property and casualty insurance companies, as well as specialty insurance lines when appropriate.
For companies subject to the New Jersey Insurance Fraud Prevention Act that provide private passenger automobile or health insurance, examinations also include reviews of compliance with fraud prevention, detection and reporting requirements.
According to the department, these examinations are intended to promote fair competition, combat insurance fraud and protect consumers from improper, misleading or deceptive business practices.
How consumers can file complaints
New Jersey residents who have questions about the GEICO enforcement action or believe they have been treated improperly by an insurance company can contact the Department of Banking and Insurance.
Consumers can submit a formal complaint through the department’s online complaint form or call the Consumer Hotline at 1-800-446-7467 or 609-292-7272.
The department’s enforcement order and market conduct examination report are also available online.
