Texas Driver Sues GEICO Over Alleged Misuse of Accident Forgiveness, Claiming Premium Hike Despite Clear Terms

AUSTIN, Texas – A Texas resident has filed a class action lawsuit against GEICO, claiming the insurance giant failed to honor its own Accident Forgiveness program after a first-time automotive accident involving his wife. Christopher Cude initiated the legal action on February 25, alleging that after his wife’s minor car accident in October, GEICO raised their auto insurance premium by a staggering 91%.

Cude had previously enrolled in GEICO’s Accident Forgiveness program upon renewing his auto insurance in May which, according to the insurer’s policy, should have prevented the first at-fault accident from affecting their premium rates. However, upon receipt of a policy renewal notice, Cude discovered his annual premium had soared from $1,358 to $2,664. When he contacted GEICO to clarify this significant hike, a representative responded by stating the original premium had not increased but that a surcharge had been applied instead.

The lawsuit accuses GEICO of deceiving customers by effectively increasing premiums for those with Accident Forgiveness through the imposition of what it terms a surcharge. This, Cude claims, violates both the Texas Deceptive Trade Practices Act and the Texas Insurance Code.

GEICO’s promotional materials explicitly state that a customer’s insurance rate will not rise following their first qualifying accident. According to the company’s website, this benefit is available to any eligible drivers on the policy, but can only be utilized once. After its use, the benefit expires for the subscribers of that policy.

Eligibility for the accident forgiveness hinges on several criteria: the insurance policy must be with GEICO for at least five years, and at least one driver on the policy should have a minimum of five years of driving experience. There should be no qualifying claims in the last five years and age requirements may differ from state to state.

Amid these allegations, GEICO has seen a significant improvement in its financial performance, citing a pre-tax underwriting profit of $7.8 billion in 2024, a major leap from previous years. This is a considerable recovery from a nearly $2 billion underwriting loss in 2022. The insurer’s combined ratio also reflects this upward trend, improving by over 20 points from 2022 to 81.5 in 2024.

As of now, GEICO has not publicly responded to the allegations made in the lawsuit.

This legal case emerges against a backdrop of a broader discussion on the transparency and fairness of insurance premiums and the actual benefits of programs like Accident Forgiveness, which are marketed heavily to consumers looking for extra security and stability in their insurance coverages.

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