Geico Agrees To $6M Settlement over Business Practices in California

August 24, 2015

  • August 25, 2015 at 4:54 pm
    Doug Spencer says:
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    This article implies that 15,000/30,000 minimum liability may be used in CA for the next 3 years (regulating GEICO). This minimum liability level was set in 1974! This liability level is better than being uninsured but is very underinsured for California.

    Most clients intentionally want higher liability coverage (only allowed to have the same or less uninsured BI than the BI liability coverage given to others).

    Assume in CA 20% of drivers uninsured about 20% grossly underinsured at 15/30 (minimum for tags to be legal set in 1974).
    There is a very high probability that you may need and want higher BI liability for your family benefit (if 40% of motorists are grossly uninsured/under insured).

    This uninsured/underinsured liability coverage is a real concern near CA agricultural areas or older local urban areas.
    The other reason to have higher liability is you reside in California and may have higher income (legal target).
    We have high percentage of attorneys per capita in CA and more victim expectation of bodily injury compensation.
    The current CA legal case law is liberal during the settlement phase.

    This may be counter intuitive, it appears that the people hurt the most by the outdated 15,000/30,000 liability limits are those that live in more modest areas (assuming higher concentration of grossly under insured motorists).

    Would appreciate if the California Department of Insurance put more energy into updating (indexing for current value) to a more rational liability limits! GEICO should be endorsed for encouraging higher liability limits not fined.

    • September 1, 2015 at 1:50 pm
      mccluney says:
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      I could not agree with you more. Your comments are valid. The problem lies with the CA state law which requires insurance companies to offer the lower limits. GEICO according to the article did not offer the limits as required. I have helped some clients to obtain the lower limits as they were judgement proof for not having any assets. I have also strongly discouraged clients who wanted the lower limits when they had considerable assets at risk.



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