GEICO ‘Preyed’ on Consumers by Selling Liability-Only Policies as Full Coverage Products, Suit Says

A proposed class action lawsuit claims that Government Employees Insurance Company, more commonly known as GEICO, “has engaged in the most substantial ‘bait and switch’ marketing campaign in the history of consumer auto insurance in the state of California.”

The lawsuit contends that the defendant, who frequently advertises that “15 minutes could save you 15% or more on car insurance,” uses misleading marketing language to trick consumers into switching their insurance to “inferior” GEICO policies that they falsely believe will provide equivalent coverage.

According to the case, GEICO routinely offers what the company refers to as a “full comprehensive package” to customers who request an “apples-to-apples” comparison of their current liability and collision insurance and an identical GEICO policy. The case claims, however, that GEICO conceals the fact that its full comprehensive package does not include collision coverage, which covers damage to the policyholder’s vehicle in the event of an at-fault accident, despite marketing the policy as a “full coverage” product. As a result of the defendant’s representations, many GEICO customers were “duped” into buying a liability-only insurance policy under the belief that the plan would provide both liability and collision insurance, the lawsuit contends.

For example, the lead plaintiff claims he purchased a policy from GEICO in August 2017, which the defendant claimed was identical to the man’s then-current ESURANCE collision and liability insurance. After the plaintiff was involved in an accident in October 2018, however, GEICO allegedly informed him that his policy did not cover collision damage and subsequently denied his claim for repairs to his 2012 Lexus RX350.

Confusion over “Comprehensive” Coverage

The complaint claims GEICO uses deceptive marketing tactics to “prey on consumer confusion” regarding the definition of “comprehensive” coverage. According to the complaint, most Americans do not understand that comprehensive policies cover liability only, or that comprehensive insurance is designed to be an “add on” to existing liability or full-coverage policies.

Instead, most consumers believe that comprehensive auto insurance covers both liability and collision damage, the lawsuit explains. The case claims GEICO’s use of the term “comprehensive” easily misleads customers because the average American reasonably believes that the word means something similar to its dictionary definition of “complete, including all or nearly all elements or aspects of something.”

The lawsuit argues that GEICO was aware that most consumers do not understand the meaning of “comprehensive” insurance and intentionally marketed a liability-only policy as a “full comprehensive package,” knowing the policy’s name was likely to deceive customers into thinking the plan provides both collision AND liability insurance.

GEICO Employees “Revolt”

GEICO allegedly trained and encouraged field representatives to market the full comprehensive package as a full coverage policy and “push” the plan on consumers. According to the complaint, many field representatives were not comfortable with the way GEICO was representing its product and began to raise an “outcry” over what the case claims to be “fraudulent tactics.” Additionally, GEICO began to receive “dozens” of complaints about the full comprehensive package from customers, the suit says.

To help ease rising concerns among employees and customers, GEICO updated its “Sales Training and Performance” guide in mid-2019 in order to clarify the full comprehensive package to consumers, the complaint states. The lawsuit includes the following example conversation from the updated guide, which GEICO purportedly hoped would help clarify the nature of comprehensive policies to customers:

Now that we have worked through the package you would like to purchase, I just want to let you know that since you do not have collision protection, your vehicle will not be covered if you are in an at fault accident.”

The lawsuit contends that despite this clarification, GEICO specifically directed its agents not to inform customers that the full comprehensive package does not cover collisions until after the customer had committed to purchasing insurance, proving that “GEICO’s focus is ultimately on their bottom line.”

Who Is Included in the Suit?

The suit looks to cover all consumers in California who purchased GEICO’s full comprehensive package but did not receive collision coverage during the applicable statute of limitations.

What If I Don’t Live in California?

Unfortunately, the suit only seeks to cover California residents; however, if you don’t live in California and would like to start a class action against GEICO, attorneys in your state may be willing to help.

How Do I Join the Class Action? 

Generally, you don’t need to do anything to join a class action suit. If you are covered by the lawsuit, you will typically be sent a notice if and when a settlement is reached with instructions on what to do next.