State regulators found errors affecting more than 15,000 New Jersey drivers who had GEICO auto insurance and resulting in more than $10.5 million in refunds or credits. The problems included billing errors, improper policy cancellations and notices missing required information. On top of the refunds, GEICO and its affiliates also agreed to pay a separate $1.2 million penalty to the state.
The findings come from an examination by New Jersey officials, who said GEICO charged rates above what regulators had approved, canceled some policies for improper reasons, left required language out of certain notices that could lead to nonrenewal, and failed to adequately explain some policyholders' rights, according to New Jersey Monitor. The state's Department of Banking and Insurance opened its investigation in September 2024 after fielding consumer complaints about underwriting, rating, claims handling and policy terminations, the outlet reported.
What Examiners Found When They Dug Into the Billing
Examiners reviewed GEICO's company activity from June 2023 through May 2024, according to NJ 101.5. The review turned up a specific and costly pattern: thousands of policyholders were erroneously shifted between GEICO's affiliated insurers after the company mishandled accident-forgiveness benefits, often pushing those drivers into higher premiums.
According to the station's report, examiners identified 4,662 policies that were incorrectly transferred between GEICO companies because of those accident-forgiveness errors, generating roughly $6.74 million in refunds or credits on their own. Separately, per the seed reporting from News12 New York, GEICO classified some accidents involving other drivers as lending losses, which examiners say led to 2,251 additional erroneous transfers, and errors tied to the company's rate-capping system, which is meant to limit certain premium increases, were linked to about $2.08 million in customer refunds.
Cancellations, Notices and Total-Loss Rights Also Flagged
Beyond the transfer and rate-capping problems, the examination also found GEICO improperly canceled some policies and did not adequately inform some customers of their rights when they chose to keep vehicles that had been declared total losses, per the News12 account. The company also failed to provide information required in notices warning customers their policies could be headed toward nonrenewal.
The enforcement action included recommendations for GEICO and its affiliates to correct those procedures going forward, the same New Jersey Monitor report notes. GEICO is required to notify affected customers that billing errors were identified in the state's review and have since been corrected, according to the News12 account of the consent order.
Refunds Already Underway Before the Announcement
GEICO began voluntarily issuing refunds during the examination as problems were identified, according to the state's findings as reported by NJ 101.5, and some of those refunds were completed before this week's announcement. The consent order resolving the case was dated this past Tuesday, and under its terms GEICO waived its right to a hearing on the findings, per the News12 report.
The scope of the rate dispute underlying some of the overcharges is notable in its own right. GEICO and its affiliates had sought New Jersey rate increases ranging from 6.8% up to 26.3%, but the department approved increases only in the range of 6.8% to 19.1%, according to New Jersey Monitor's reporting on the case.
