Accident forgiveness exists for one reason: so a qualifying crash doesn’t make your car insurance more expensive. In New Jersey, according to state insurance examiners, GEICO’s version spent the better part of a year doing the opposite for thousands of drivers.
A market conduct examination report adopted Oct. 20 by the New Jersey Department of Banking and Insurance found that GEICO moved 14,123 policies out of its flagship underwriting company, Government Employees Insurance Co., and into GEICO Indemnity Co. after evaluating them for accident forgiveness. Examiners concluded that 4,662 of those transfers, about one in three, were made in error. The transfers came with higher premiums. On that problem alone, GEICO has issued $6,744,192.26 in refunds and credits, all of it after the examination findings, according to the report.
That is the biggest slice of more than $10.5 million GEICO has returned to New Jersey policyholders across three separate rating problems, each of which examiners characterized as a failure to rate policies according to the company’s own filed and approved rating plans. On top of the refunds, the state imposed a $1.2 million administrative penalty on GEICO and four affiliates, GEICO Secure, GEICO Choice, GEICO Indemnity and GEICO Casualty, in a consent order signed by Acting Commissioner Susan Ochs. GEICO signed the order on Sept. 28 and waived its right to a hearing.
Same logo, different company
Most drivers never notice which legal entity underwrites their policy. Here it was the whole ballgame. The report describes Government Employees Insurance Co. as GEICO’s preferred-risk carrier, while GEICO Indemnity has marketed to young adults, military personnel and drivers “who do not qualify as preferred risks.” When the system decided a policy no longer met the first company’s acceptance criteria, the policy went to the second.
“The transfer of companies resulted in increased premiums which prompted the consumer complaints,” the examiners wrote.
Those complaints are where the problem was hiding. When examiners drew a random sample of 157 new and renewal policies, they found zero rating errors. When they pulled the files from complaints filed with the department, the error rate was 100 percent: 11 of 11 on lending losses, 8 of 8 on accident forgiveness and 1 of 1 on rate capping. Then GEICO audited larger samples itself and the numbers stopped looking like coincidence.
Penalized for lending a car, sometimes without lending it
The second problem involved what insurers call a lending loss: a crash by someone who isn’t listed as a driver on the policy, behind the wheel of a car the policyholder lent them. GEICO moved 14,362 New Jersey policies from Government Employees to GEICO Indemnity over lending losses during the review period. Examiners found 2,251 of those transfers were wrong.
The causes, per the report, were not exotic. In nine of the 11 complaint files, underwriters had not done the detailed claim review needed to determine whether a vehicle had actually been lent. Other errors came from a mismatch in driver information and from a newly listed driver being wrongly flagged.
Both the lending-loss and accident-forgiveness errors began with renewals effective July 30, 2023. The lending-loss errors were resolved with renewals effective Feb. 18, 2024. The accident-forgiveness errors ran until May 31, 2024, when GEICO installed a system update that prevents a tier change on a policy if there is a forgiven loss in its experience period. So the system now checks whether it forgave an accident before charging you for it.
Examiners wrote that GEICO “was aware of the incorrect underwriting decisions prior to the examination and failed to correct the issue.” GEICO told them it knew of “periodic” underwriting decision issues during the review period but not the systemic errors the exam uncovered, and that it had no discrete start date for when the execution errors began.
The refund ledger makes the timing hard to miss. Before the exam, GEICO had refunded $1,705.99 for lending-loss errors, on a single policy it reported itself. After examiners intervened, it issued another $1,755,083.20.
The fix that needed its own fix
The third problem started as a software conversion. When GEICO moved policies onto a new rating plan, flaws in the system logic disrupted rate capping, the factors that limit how sharply a renewal premium can change. On March 29, 2024, GEICO ran a systematic update meant to correct the underlying data. According to the report, that update “failed to include the correct factors on non-premium transactions,” creating a second error.
The affected window ran from March 27, 2024, to May 2, 2025, and touched 12,605 policies. GEICO said 9,714 of them were overcharged and received a combined $2,076,482.50 in credits; the remaining 2,891 saw no premium effect or a favorable one. Credits reached back as far as three policy periods, roughly 18 months, and were all issued by May 22, 2025.
Day 64 is not the first 60 days
The rating errors drove the refunds, but examiners also flagged how GEICO ended policies. In New Jersey, the first 60 days of an auto policy carry looser cancellation rules than the rest of the term. Examiners found 49 policies cancelled after that window with notices stating the policy was still within its first 60 days of issuance. One was cancelled on day 64.
Others were cancelled midterm for ridesharing or food and goods delivery when, by GEICO’s own explanation to examiners, underwriters should have processed a nonrenewal instead. Four policies were nonrenewed because the customer didn’t return a questionnaire, without the 180 days of advance notice required for that reason. GEICO argued those were “general questionnaires.” Examiners pointed out that GEICO’s own system labeled them “Renewal Questionnaire.” Nine more questionnaire requests left out the required warning that not returning the form could cost the customer the policy.
On the claims side, examiners found eight total-loss cases in which owners kept their wrecked cars but never got the written notice of salvage rights required under state regulation; GEICO agreed with that finding. In one personal injury protection claim, a $250 deductible was applied twice, shorting the claimant $118.06 plus $4.77 in interest. GEICO paid the difference after examiners asked.
What New Jersey GEICO customers should do
The examination covered policies in force from June 1, 2023, through May 31, 2024, with fieldwork beginning Sept. 4, 2024, and some reviews continuing into October 2025. If you were affected, the money was supposed to come to you as a refund or credit. Here’s how to check:
- Look for a letter. The report requires GEICO’s refund notices to tell customers that the company made errors in their payments or billings, and that the errors were found during the state’s examination.
- Check your declarations pages. Compare renewals from mid-2023 through mid-2025. If the underwriting company changed from Government Employees Insurance Co. to GEICO Indemnity Co. and your premium jumped, especially after a forgiven accident or a claim involving someone else driving your car, ask GEICO in writing whether your policy was reviewed.
- Don’t assume the review is closed. When the report was written, GEICO was still assessing some affected policies and refunds. Examiners directed it to review every impacted policy and report the refunds to the department.
- File a complaint if you’re not satisfied. The department takes complaints through its online form, by phone at 1-800-446-7467 or 609-292-7272, or by mail at NJDOBI, P.O. Box 471, Trenton, NJ 08625-0471. Details are on the DOBI consumer page. Include your policy number and copies of your declarations pages.
Under the consent order, GEICO must keep monitoring its underwriting, termination and claims operations, and the department may reexamine the company within 12 months. GEICO’s directors have 30 days to swear they received a copy of the report.
This is not the first time this year that GEICO has paid to settle questions about the records that drive what drivers pay. In August, The Auto Wire reported on a separate $1.65 million class-action settlement over how the company handled claims-history reports.
The rule GEICO’s system now follows could fit on an index card: if you forgave the accident, don’t charge for it. In New Jersey, it took a state examination, roughly 4,600 wrong transfers and $6.7 million in refunds to get it written into the code.
Have you ever checked which GEICO company actually underwrites your policy, or noticed it change at renewal?
Top photo: Harrison Keely via Wikimedia Commons, CC BY 4.0.