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Don’t trust the gecko for an auto quote, consumer group warns

Sat Feb 21st, 2015 on     Insurance Law,    

We are picking up the discussion from our last post — the discussion about the Consumer Federation of California’s complaint to the state’s insurance department about Geico Insurance Co. The problem, the CFC says, is that the Geico online application’s rating process requires applicants to supply information in violation of state law and then uses that information to discriminate against certain categories of applicants.

Florida also prohibits insurance companies from basing rate differentials on certain demographic characteristics. Those characteristics include the usual suspects — age, race, disability, gender — as well as accident history, moving violations, marital status and one unusual suspect: scholastic achievement.

California, under Proposition 103 (the Automobile Insurance Reform Act), also prohibits the use of education in setting rates. The state also bars ratemaking based on occupation. The CFC concludes that the insurer has no reason to ask for the information. But it the online app does.

Most states require that drivers carry a certain amount of auto insurance. In Florida, the minimums are $10,000 for individual bodily injury, $20,000 for total bodily injury, and $10,000 for property damage liability — we are a “10/20/10” state. Rates vary from state to state. California is a 15/30/5 state, according to QuoteWizard.com.

California not only requires drivers to carry 15/30/5 coverage, it also requires insurance companies to offer good drivers a policy with a minimum of 15/30/5 coverage. In the Geico app, though, a driver that identifies himself or herself as follows does not, as a rule, get an offer for 15/30/5 coverage. As we said in our last post, those drivers cannot be married, have a college degree or, at the time of the application, have insurance. Further, if the driver is employed, he or she cannot be working in a professional job or as an executive.

Instead, Geico offers these applicants coverage with “lowest limits” of 100/300/50. The rate would be good for six months.

That’s not the end of it, though, according to the CFC. We’ll wrap this up in our next post.

Sources:

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

Florida Jurisprudence, Second Edition, Permissible Rates and Rating Plans, 30B Fla. Jur 2d Insurance § 2088 (February 2015), via WestlawNext

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