The state found unapproved rates, wrongful cancellations, and customers pushed into pricier coverage. Refunds total $10.5 million.
Fifteen minutes could save you 15 percent. For more than 15,000 New Jersey GEICO customers, the math ran the other way.
Fast.
The New Jersey Department of Banking and Insurance announced Tuesday that GEICO must return more than $10.5 million in refunds and credits to policyholders it overcharged, and pay a $1.2 million penalty on top of that. The company agreed to the penalty and waived its right to a hearing in a consent order dated Oct. 20.
The part everyone else is skipping is how the overcharging happened.
The Accident Forgiveness Problem
Accident forgiveness is the feature you pay for so one bad day does not follow you around on your premium. According to the state’s examination, GEICO applied it incorrectly. Investigators also found the company misclassified certain accidents involving other drivers in a way that counted against its own customers.
The result was not just a higher bill. Policyholders got moved. GEICO operates through several affiliated insurers, and these errors pushed thousands of customers from one affiliate to another, landing them in pricier coverage. Examiners counted 4,662 wrongful transfers tied to accident forgiveness and another 2,251 tied to the accident classification errors.
So a driver who did everything right, paid for the protection, maybe got rear-ended at a light on Route 1, could have ended up paying more because of it.
It Gets Longer
The state found problems in GEICO’s rate-capping system too, the mechanism meant to limit how much certain premiums can jump. Those errors alone account for roughly $2.08 million of the refunds.
Examiners also documented four broader violations. Charging rates higher than the state had approved. Canceling policies for improper reasons. Leaving required language out of nonrenewal notices. And failing to tell drivers whose cars were declared a total loss what their rights were if they wanted to keep the vehicle after settlement.
That last one is easy to overlook and it matters. People keep totaled cars all the time, usually because they can fix them cheaper than replacing them, and the rules around title and registration are not intuitive.
How This Came Out
Customers complained. That is the whole origin story. The department opened its market conduct examination in September 2024 after the complaints came in, and the review ran for over a year.
GEICO began issuing refunds voluntarily as examiners flagged errors, and some of that money went out before Tuesday’s announcement. The company is now required to notify affected customers that billing errors were found during the state review and corrected.
“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,” Acting Commissioner Susan Ochs said.
How to Know If You Were Affected
If you had a GEICO auto policy in New Jersey over the last few years, watch your mail and your email for a notice. GEICO is required to send one. If you already got a refund or a credit and did not know why, this is probably why.
If something about your policy never sat right, a jump after a not-at-fault accident, a cancellation that seemed off, a total loss where nobody explained your options, you can call the department’s consumer hotline at 1-800-446-7467 or file a complaint online.
The New Jersey Digest is a new jersey magazine that has chronicled daily life in the Garden State for over 10 years.
