Connecticut Insurance Department Fines GEICO Companies Total of $177,500; Two GEICO Subsidiaries Found Non-Compliant with Auto Glass Deductible Law, According to Report

April 13, 2010

The Connecticut Insurance Department has fined four GEICO subsidiaries a total of $177,500 for several items found during a recent market conduct examination. Among the citations noted in the recent report, two specific subsidiaries, GEICO Casualty and GEICO Indemnity, were cited for failure to comply with the state's law requiring that optional coverage for safety glass repair or replacement be offered at all deductible levels.

"They've found instances where GEICO did not offer glass repair or replacement coverage at all deductible levels," says Dawn McDaniel, a spokesperson for the Connecticut Insurance Department.

The Connecticut insurance statute regarding insurance deductibles for auto glass coverage cited in the report reads as follows:

Comprehensive automobile coverage to include optional coverage for repair or replacement of damaged safety glass without deductible or minimum amount. Each automobile insurance policy providing comprehensive coverage, whether designated as such or included in a policy providing broader coverage, shall provide at the option of the insured complete coverage for repair or replacement of all damaged safety glass without regard to any deductible or minimum amount.

To resolve this, in addition to the associated fines, the Connecticut Insurance Department is requiring that the companies begin complying with the statute, and "re-file these options with the Department."

According to information from the state, GEICO has said it will comply with the state's orders and will submit a compliance report to the commissioner within 90 days.

Other citations noted in the report include policy cancellations (for example, policies being cancelled for non-payment without a 15-day notice); non-renewals of policies for reasons not listed in the company's filed underwriting guidelines; failure to resolve claims in a timely manner; failure to pay loss-of-use damages (when the claimant was unable to use his/her vehicle) in certain instances; and the use of unlicensed adjusters.

The fines break down as follows among the four GEICO subsidiaries included in the report: GEICO Casualty Company, Maryland ($49,000); GEICO General Insurance Company, Maryland ($31,500); GEICO Indemnity Company, Maryland ($64,500); and Government Employees Insurance Company, Maryland ($32,500).

"Connecticut statutes are in place to protect consumers, and violations of these laws are unacceptable," says Connecticut's insurance commissioner, Thomas R. Sullivan. "We will continue to scrutinize companies in this industry to ensure they are committed to conducting business within the boundaries of our insurance laws."

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