NJ hits Geico with hefty fine for billing $10M too much for car insurance

New Jersey officials accused Geico of overcharging motorists $10.5 million for car insurance and slapped the Maryland-based company and its affiliates with a $1.2 million fine for a “systematic pattern” of improper business practices.

Officials in the state Department of Banking and Insurance’s consumer protection office began investigating Geico in September 2024 after customers complained about the company’s underwriting and rating, claims, and policy terminations. The department released its findings Tuesday.

Investigators examined the company’s activity between June 2023 and May 2024 and found problems impacting more than 15,000 policyholders. They say Geico charged higher rates than the department approved, canceled policies for improper reasons, did not include required language on notices that could lead to policy nonrenewal, and failed to inform policyholders of their rights for those who kept vehicles declared a total loss.

The penalty comes as car insurance rates soar in New Jersey, a trend that has prompted advocates to criticize the department for approving most rate hike requests and urge officials to do more to protect consumers, especially as inflation rises and affordability worsens.

Susan Ochs, the department’s acting commissioner, said her agency works to end bad business practices that harm New Jersey residents. The department also investigates life, health, managed care, and property and casualty companies to ensure they comply with state insurance laws and treat the public fairly.

“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,” Ochs said in a statement.

Besides Geico, investigators also examined its affiliates Geico Secure Insurance Company, Geico Choice Insurance Company, Geico Indemnity Company, and Geico Casualty Company.

As part of its enforcement action against Geico, investigators made recommendations for the companies to correct their procedures.

Geico began refunding customers the premiums they were wrongfully charged while the investigation was still ongoing, according to the department.

The year investigators began their probe, Geico and its affiliates sought rate hikes ranging from 6.8% up to 26.3%, with the department approving increases of 6.8% to 19.1%, according to data the New Jersey Monitor obtained earlier this year through public records requests.

New Jersey consistently ranks among the top 10 costliest states for car insurance.

Consumer protection advocates have long complained about how car insurance companies decide rates, demanding lawmakers ban insurers from assessing risk using factors advocates deem discriminatory, such as a motorist’s education, marital status, occupation, zip code, credit history, and other things that have nothing to do with driving. The insurance industry has fought such efforts, and lawmakers have not acted.

The department advises that residents who have insurance problems can file a formal complaint against any insurance company online or by calling its hotline at 800-446-7467 or 609-292-7272.