A class action lawsuit filed in Texas against GEICO alleges the insurance company has falsely advertised its “Accident Forgiveness” benefit.

Plaintiff Christopher Cude’s complaint states that his premium increased by 2.5% upon renewal in May 2024 and included the Accident Forgiveness benefit for free, which would waive a surcharge associated with the first at-fault accident caused by an eligible driver on his policy.

However, in November following an at-fault accident the month before, GEICO increased Cude’s premium by 91.3%, according to the complaint.

“GEICO represented to consumers that if you purchase GEICO Auto Insurance, Accident Forgiveness coverage would be awarded and/or could [be] added if you have been insured with GEICO for five years and have a ‘clean driving record,”” the complaint states. “Consumers can also purchase GEICO’s Accident Forgiveness coverage when initially purchasing GEICO Auto Insurance or when renewing a GEICO auto insurance policy.

“GEICO further represents that ‘[h]aving Accident Forgiveness offers peace of mind and can save you money in the long run’ [and] …will prevent insurance rates from increasing as a result of a driver’s first at-fault accident.”

According to the complaint, when Cude asked GEICO why his premium was increased, the company denied it was an increase and called it a surcharge.

Cude argues that GEICO is in violation of the Texas Deceptive Trade Practices Act and insurance code, and has profited off its policyholders by breaching the implied covenant of good faith and fair dealing.

“GEICO enjoyed the benefit of increased financial gains, to the detriment of plaintiff and the class members, who paid higher premium prices,” the lawsuit states. “It would be inequitable and unjust for GEICO to retain these wrongfully obtained profits.”

As of Thursday afternoon, GEICO hadn’t filed a response in court to the complaint.

According to data compiled by S&P Global in September, as of Q2 2024, GEICO had an 11% increase year-over-year premium change.

Earlier this month GEICO’s parent company, Berkshire Hathaway, reported its operating earnings for Q4 2024 were $14.5 billion, up from nearly $8.5 billion in Q4 2023.

Insurance underwriting saw the largest increase, with $3.4 billion reported in Q4 compared to $848 million reported during the same time in 2023. Insurance investment income also saw a massive increase in earnings, with nearly $4.1 billion recorded in Q4 compared to nearly $2.76 billion in Q4 2023.

“In 2024, Berkshire did better than I expected, though 53% of our 189 operating businesses reported a decline in earnings,” wrote Warren Buffett, company chairman and CEO, in his annual letter to shareholders. “We were aided by a predictable large gain in investment income as Treasury Bill yields improved and we substantially increased our holdings of these highly-liquid short-term securities. Our insurance business also delivered a major increase in earnings, led by the performance of GEICO.”

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