The Geico Gecko is a national symbol for the Geico insurance company. It’s a leading home, life, auto, and pet insurance provider in the United States. The Berkshire Hathaway-owned company established a solid reputation for its reasonable premiums, exceptional customer service, and support for diversity and strong communities through its donations to various charitable organizations throughout the US. It’s recognized as the second largest provider but is Geico considered an exemplary insurer?
On the outside, it appears to be among the most trusted; however, the growing number of lawsuits against them suggests otherwise. It’s one of the better options, but Geico has had its share of legal issues. Execs rarely settle out of court, nor does the company offer fair settlements in lawsuits filed against them. It has its pros and cons, and here are the 10 biggest lawsuits in company history to show that, like most other larger insurers, it’s not perfect.
10. Geico lawsuit over consumer protection offenses
Penalty amount: $177,500
Geico paid a hefty penalty for committing insurance violations against Connecticut’s consumer protection laws. A civil case filed in a state court in Connecticut alleged that four Geico subsidiaries faced claims for improperly rating claims, causing delays in investigating and honoring promised reimbursements and authorizing unlicensed claims adjusters to follow up on policyholders’ claims. The Connecticut Insurance Department followed up on complaints. They discovered that Geico’s subsidiaries had broken Connecticut consumer protection laws.
A market conduct exam of the company revealed illegal practices, which triggered a crackdown on such practices. On April 8, 2010, Geico received a fine of $177,500 to resolve the issues with additional orders to change the practices and bring its subsidiaries into compliance with the laws. A market conduct examination revealed instances of unlicensed adjusters within these subsidiaries. The Connecticut Insurance Commission vowed to “continue to scrutinize companies in the industry to ensure they are committed to conducting business within the boundaries of [they are] insurance laws”.
9. Geico settles injury settlement in car and bike accident in 2021
Settlement amount: $350,000
A cyclist in South Florida was struck by a motorist insured by Geico in 2020. The rider sustained injuries to his leg in the incident. Medical testing revealed 3 broken ankle bones, requiring multiple surgeries and procedures to fix broken bones in the lower part of his leg. He experienced issues negotiating a fair settlement with Geico over the incident. The cyclist retained the services of a private attorney to receive fair compensation. The driver’s policy covered $300,000 in bodily injury and a total of $1 million for accidents of this nature.
Records from the 911 dispatcher’s recorded conversation with the accident victim and records from the attending physicians and the orthopedic doctor confirmed that the rider sustained serious injuries to the ankle and leg that were not corrected with the first round of surgery. Pain and swelling of the ankle continued, requiring the surgeon to remove the screws and plate in his ankle. He was diagnosed with chronic regional pain syndrome, a lingering effect of the injury.
He was referred to a pain management specialist to help address the ongoing issue. Geico’s defense team asserted that the cyclist was partially responsible for the accident because he did nothing to avoid the collision. The presiding judge in the case heard the evidence presented by both teams and ruled that Geico was responsible for reimbursing the victim’s medical insurers for the medical bills paid on his behalf, with some of the $350,000 awarded to the cyclist for pain and suffering.
8. Geico sued for employment law violations
Penalty amount: $1,743,320
In 2004, workers complained that Geico Insurance company mandated many workers to perform off-the-clock work for the company without compensation. The group filed a lawsuit under the case name Owens v. Government Employees Insurance Company, a subsidiary of Geico. The private civil suit was filed in a federal court in the Northern District of Texas. A federal judge found government Employees Insurance Company guilty of violating Texas wage and hour laws by ordering employees to work for the company without financial compensation. Geico lost the court case. The judge ordered them to pay a penalty of more than $1.7 million for compensation to the workers who suffered financial harm and penalties for committing illegal acts that violated Texas labor laws. The case was settled in favor of the plaintiffs on July 7, 2004.
7. Geico sued in Georgia High Court
Settlement amount: $2.7 million
Bicyclist Terry Guthrie was struck by Bonnie Winslett when cycling in February of 2012. The rider sustained neck and back injuries in the collision. Winslett was insured through a Geico insurance policy and was found responsible for the accident and injuries to the rider. The policy had a $30,000 limit. Guthrie retained an attorney because Geico offered a mere $12,409. Terry’s attorney refused the settlement offer and filed a case against Winslett. She ignored the summons and failed to appear at the hearing. The bodily injury claim was reverted to Geico Insurance because Winslett failed to notify Geico of the summons.
6. Geico loses lawsuit for refusal to pay in a bodily injury claim
Settlement amount: $2.7 million
In February 2012, Bonnie Winslett struck Terry Guthrie’s bicycle while driving her friend Karen Griffis’ Ford Explorer to a store, causing back and neck injuries. GEICO insured Griffis’ vehicle. The insurer wrote a letter to Winslett stating that the policy insured her and that GEICO was responsible for the accident but didn’t give her any other instructions. Guthrie’s attorney demanded that GEICO settle his client’s claim by paying the $30,000 limit of Griffis’ policy. GEICO offered $12,409.
Guthrie’s lawyer never responded to that offer. Instead, he filed a lawsuit against Winsett. A paralegal for the lawyer told her to notify GEICO about the suit, but Winslett never did. She discarded the summons and failed to appear in court. Geico’s failure to settle for $30,000 triggered a series of legal actions. A Muscogee County Superior Court judge rendered a default judgment against Winslett for $2,916,204. Winslett was forced into involuntary bankruptcy.
The trustee of the bankruptcy action filed a federal lawsuit against Geico for negligence and bad faith in handling the claim against the driver. Georgia has laws that prevent insurance carriers from legally refusing an offer for a reasonable settlement in bodily injury cases. The 11th Circuit court panel agreed that Geico’s failure and refusal to pay the $30,000 was punishable by fines and penalties that cost them over $2.7 million in April of 2021.
5. Geico pays the penalty for California labor law violations
Penalty amount: $3.3 million
Employees of Geico insurance Company complained that the company forced workers to provide work for the company for which they were not compensated. California Geico workers filed a lawsuit under the case name Tokar et al. v. Geico in a class-action suit. Investigators looked into the complaints, found evidence to substantiate the plaintiffs’ claims, and reported on the situation, confirming that Geico violated California state labor laws regarding wage and hour regulations. The case filed in the Superior court in San Diego County, California, settled on July 9, 2004, in favor of the plaintiffs. Geico was ordered to pay a settlement of $3.3 million for reparations, compensation awarded to the workers, and fines for breaking the law.
4. Geico sued in STD case
Settlement amount: $5.2 million
Can you get reimbursement for catching an STD in an insured car? In a zany twist, Geico became the defendant in a lawsuit to recover $5.2 million for damages sustained by a woman engaging in a sexual romp in a vehicle. Insurance Business Magazine confirms that a woman who contracted HPV in the backseat is seeking damages. Geico is contesting the suit as the couple had sex in multiple other locations, and it’s a claim that isn’t covered under the auto policy. The male insured by the company allegedly filed similar claims through “multiple carriers,” including Progressive
3. Geico sued for consumer protection offenses in California Court
Penalty amount: $6 million
In 2015, complaints about Geico Insurance providing misleading and discriminatory information on its online premium quoting system resulted in an investigation. The California Department of Insurance sent investigators to look into the complaints. They discovered that the system Geico approved violated California consumer protection laws, resulting in insurance violations. The case filed at the state level in a civil matter resulted in the California Department of Insurance levying a $6 million penalty on the company. Geico agreed to pay the penalty to resolve the case. Geico learned a valuable lesson about conforming to state laws in the incident.
2. Geico was accused of failing to pay sales tax for total loss claims
Settlement amount: $19.1 million
Geico learned a valuable lesson about factoring-in sales tax when settling total loss claims. The company habitually overlooked regulatory fees and sales taxes in settlements with California auto policyholders. The underpayments resulted in a class action lawsuit filed by Californians insured by Geico challenging the practice. The suits were filed between June 2015, October 2016, and June 2017 and addressed Geico’s General, Indemnity, and Casualty and government Employees Insurance divisions through August of 2020 combined to form the class action.
The plaintiffs sought remediation for regulatory fees and sales taxes. Courts awarded them a settlement of $19.1 million, which Geico agreed to pay. Top class Actions further explained that the average member settlement amount was $2,051.98. Based on loss calculations, some members received lower and higher amounts as individual payments. In California, sales tax was 7.25% of the compensation and $6.88 for regulatory fees. Geico will issue checks by December 15, 2022.
1. Geico to pay Floridians for underpayments on claims
Settlement amount: $27 million
Top Class Actions confirms that Geico Insurance Company faced a class action settlement for failure to compensate its policyholders for the fees associated with license plate transfer fees and title transfers in total loss claims. Government Employees Insurance Company and Geico General Insurance Company faced allegations. They failed to comply with Florida laws governing insurance from October 10, 2012, through April 4, 2018, regarding total loss payments on submitted claims. Investigators discovered evidence to substantiate the claims and submitted findings to the federal court overseeing the proceedings. Judge Paul G. Byron weighed the facts produced and determined that Geico was negligent by failing to make the fee compensations. Members of the class action settlement received varying dollar amounts in a fund for $27 million, which the court ordered Geico to pay.
Additionally, Florida drivers have protection from further financial loss from Geico in claims for total loss. The case was one of many total loss violations committed by Geico and its subsidiaries, but it was not the last. A settlement of more than $19 million provided the same relief for Californian drivers.
Geico is a reputable insurance provider ranked as the second largest in the United States. Although millions of customers are pleased with the services, many have experienced issues with being short-changed by stingy compensations offered for claims submitted. Sometimes you need to seek legal advise to determine if the offer is fair and within the maximum allowed under the law in your state. If you feel you’re not being treated fairly, you have the right to consult legal counsel to ensure you get the compensation you’re entitled to under the law.