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15 minutes for auto quote? 15 reasons not to trust the lizard

Tue Feb 17th, 2015 on     Bad Faith Insurance,    

We find ourselves making reference to television ads and F. Scott Fitzgerald today. The first appears in the title of the post, which, of course, refers to the Geico ads in which the adorably charming Geico Gecko cheerfully informs us that 15 minutes will save us 15 percent on our auto insurance. The second comes in the form of an observation we are certain others share: California is different from you and me … and Florida.

The Consumer Federation of California has filed a complaint with that state’s Department of Insurance about Geico’s online quote application. Geico Insurance Co. is a subsidiary of Berkshire Hathaway and, according to its website, currently insures more than 22 million vehicles on more than 13 million auto insurance policies across the country.

According to the petition, the insurance company’s online app violates consumer protection laws — specifically, the Automobile Insurance Reform Act (Proposition 103), the Unfair Insurance Practices Act and the Unruh Civil Rights Act — by asking applicants for information about their education and occupation and adjusting the recommended rates based on that information. The violations are so egregious, the CFC says, that the state should consider revoking the company’s license to sell auto insurance.

The app apparently offers higher minimum coverage levels than the state allows, but only to motorists with certain characteristics. These applicants are good drivers, unmarried, not professionals (doctors, lawyers, etc.) or executives, not college graduates and, at the time of the application, not insured. This is not a “choose one from column A” issue; the applicants share all of these attributes.

The quotes aren’t just higher than they should be. They are much, much higher: 500 percent to 1,000 percent, according to the CFC.

Not surprisingly, California law frowns on this.

We’ll explain in our next post.

Source: Insurance Journal, “California Consumer Group Seeks Enforcement Action Against Geico,” Feb. 13, 2015

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