Thursday, 28 October 2010 15:56

GEICO target of proposed class action for ‘deceptively selling’ auto insurance policies

GEICO is accused in a proposed class-action suit of “deceptively selling” auto insurance policies by failing to tell some of its policyholders the legal amount of uninsured and underinsured motorist coverage they were required to buy.

The suit, filed in federal court in Newark, N.J., against the Washington, D.C.-based insurer alleges that GEICO breached its its fiduciary duty, insurance law, and the Consumer Fraud Act, according to a New Jersey Law Journal report.

The suit also seeks upgrades to the allegedly improper policies, meaning GEICO could be required to increase the amount of UM/UIM coverage to the higher amount. Plaintiffs who were hurt in accidents and reached their policy limits want three times the actual damages, plus legal fees, from the court, according to the report.

State law requires insurers to give drivers the option of buying UM/UIM coverage equal to the amount for bodily injury liability up to $500,000 for a single-limit policy or $250,000/$500,000 for a split-limit policy. In cases where lower policy limits are obtained, insurers must obtain from the policyholder a signed coverage selection form listing available options.

GEICO is accused in court papers, according to the report, of using “a policy and practice of deceptively selling [standard automobile liability] insurance policies with UM/UIM coverage limits less than the coverage limits provided for Bodily Injury Liability without obtaining the required written elections.”

Denise Soto-DeJesus, who bought a policy from GEICO by phone in May 2007 for her 1994 Nissan, alleges that she bought $100,000/$300,000 for bodily injury liability and was entitled to the same amount of UM/UIM protection, according to the suit, filed by Michel Galpern of the Locks Law Firm in Cherry Hill, N.J.