A Texas man has filed a class action lawsuit against GEICO, claiming the insurance company is not following its own Accident Forgiveness policy. Christopher Cude, a resident of Texas, initiated the legal action on February 25, after his wife was involved in a minor accident in October 2024. Despite having an unblemished driving record and qualifying for the Accident Forgiveness benefit, Cude was shocked to see his auto insurance premium jump by 91%.
Cude’s troubles began when he received a renewal notice for his policy in November, revealing that his premium had soared from $1,358 to $2,664. He reached out to GEICO for clarification, reminding them that they had promised to waive any surcharge for a first at-fault accident under their Accident Forgiveness program. However, according to Cude, a GEICO representative claimed that the premium increase was not a violation of the policy but rather a surcharge that was applied.
The lawsuit accuses GEICO of misleading customers about the terms of its Accident Forgiveness program. It alleges that the company is violating the Texas Deceptive Trade Practices Act and the Texas Insurance Code by artificially inflating premiums for those who qualify for the benefit. The lawsuit argues that GEICO is using terms like “surcharge” to disguise what is essentially a rate hike.
GEICO’s website states that a customer’s insurance rate will not increase due to a first qualifying accident. The company also notes that if there are multiple drivers on a policy, any eligible driver may use the benefit once. However, after one use, the benefit is no longer available for that policy.
To qualify for Accident Forgiveness, drivers must meet several criteria, including having been insured with GEICO for five years, having at least one driver with five years of driving experience, and not having any qualifying claims in the past five years.
This lawsuit comes at a time when GEICO has reported significant improvements in its financial performance. The company announced a pre-tax underwriting profit of $7.8 billion for 2024, a stark contrast to the nearly $2 billion loss it faced in 2022. GEICO’s combined ratio also improved significantly, indicating better underwriting results.
As the case unfolds, it raises questions about how insurance companies communicate their policies and the implications for customers who believe they are protected under specific programs. GEICO has not yet responded to requests for comment regarding the lawsuit.