NJ regulators recover over $10.5 million for GEICO customers improperly charged
A state examination found thousands of policyholders were charged higher premiums because of insurance rating errors. GEICO also agreed to pay a $1.2 million penalty.
More than 15,000 New Jersey GEICO policyholders were affected by improper insurance practices that resulted in more than $10.5 million in refunds and credits, state regulators announced Tuesday.
The New Jersey Department of Banking and Insurance also imposed a $1.2 million penalty on GEICO and its affiliates following an examination that uncovered overcharges, improper policy cancellations and other violations.
The investigation began in September 2024 after the department received consumer complaints.
According to the state’s examination, GEICO incorrectly applied accident-forgiveness benefits and classified some accidents involving other drivers as lending losses. Those errors caused thousands of policyholders to be transferred between affiliated insurers, resulting in higher premiums.
Examiners identified 4,662 erroneous transfers involving accident forgiveness and 2,251 involving lending-loss classifications.
The examination also found errors in GEICO’s rate-capping system, which limits certain premium increases. Those errors resulted in approximately $2.08 million in refunds to customers.
Regulators also found that GEICO improperly canceled some policies, failed to provide required information in notices that could lead to policies not being renewed and did not adequately inform some customers of their rights when retaining vehicles declared total losses.
GEICO voluntarily began issuing refunds as problems were identified during the examination, according to the department. Some refunds were completed before Tuesday’s announcement.
The company is also required to notify affected customers that billing errors were identified during the state review and corrected.
GEICO agreed to the $1.2 million penalty and waived its right to a hearing, according to a consent order dated Oct. 20.
In a statement to News 12, GEICO said it was pleased to have resolved the matter with state regulators.
"GEICO has already taken steps to address the department's recommendations," the company said.
The company also said it remains committed to its New Jersey customers and has recently lowered rates in the state.
