Saving 15% Never Cost You So Much: Geico’s War Against You

Everyone knows you can save 15% or more on your car insurance, but did you know that Geico is the worst auto insurance company in America?

To be sure, we all detest auto insurance companies, but in the universe of suckage, not all insurance companies are equal. Determining which insurers are the worst or the best (or more accurately, the least worst), is not an exact science. You can measure quality of insurance by any number of metrics, including: customer service scores, speed of payouts, amount of payouts, percentage of denied claims, and profitability. Ranking auto insurers is a confusing endeavor. Don’t believe me? Just google “worst auto insurance companies” and “best auto insurance companies.” You will find no patterns, and often times you will see the same insurer on the “best” and “worst” lists.

The rubric this piece uses to assess Geico as the absolute worst of the worst of automobile insurers is, “If you were involved in a motor vehicle accident, which insurance company would you most hate to be involved?” By that standard, Geico is the clear winner in our competition for the title of “Worst Auto Insurer in America.” No other insurer comes close to challenging Geico for this title.

As a personal injury attorney, I deal with automobile insurance companies every working day of my life. Each of them have certain reputations. For example, USAA is considered fairly generous, but its generosity is often times counteracted by extreme incompetence. Liberty Mutual is known for never hiring enough claims adjusters; the result being poor customer service and slow response time. Allstate is known for treating its insureds very well until a claim is filed; once a claim is filed, Allstate treats its insureds like unfortunate squirrels standing near the edge of the Grand Canyon—which is to say not well. The American Association of Justice named Allstate the worst insurance company in America, saying, “There is no greater poster child for insurance industry greed than Allstate.”

Geico’s reputation is quite different. Geico is known for fighting. It will fight everything. If that means spending $20,000 in litigation costs to avoid paying an injured person $4,000, it will do so. Some may consider this a positive attribute, but as I will explain below, this is terrible for anyone involved in an auto accident—whether that be the assailant or the victim, or the Geico insured or the non-Geico insured.

To provide some context, let me explain to you what typically happens in the most common of all motor vehicle accidents—the low-speed rear-end accident where the vehicle in back is found to be at-fault for the accident. In these very common accidents, the person in the front vehicle will sometimes experience soft tissue injuries (sprains/strains) and receive medical treatment for a few months before making a full recovery. The injured person sends a $10,000 demand to the at-fault driver’s insurance company, and after some back and forth, the case settles for an amount between $2,500 and $8,000, depending on a wide array of factors. That is normal.

The reasons these types of cases typically settle quickly include: (1) Liability is clear, meaning the at-fault driver’s insurer cannot go to trial and argue he didn’t do anything wrong; (2) Fighting these cases through trial is going to cost, at a minimum $20,000, and most people can recognize that $20,000 is more than $4,000; and (3) Many states, including Oregon, have a statute that requires the insurers pay for the injured parties’ attorney fees if they lose at arbitration or trial. These legal fees will almost always exceed the amount in dispute by a great deal.

Geico, however, has adopted a cynical strategy of fighting all of these low-impact cases. Geico has not publically announced its reason for this, but the only reason I can think of for their actions is that it believes if it can make the claims process painful enough for injured people and their attorneys, people will stop bringing lawsuits related to motor vehicle accidents. Let me show you what this looks like up close.

I have a case right now where my client was rear-ended by a teenager. He sustained soft-tissue injuries and treated for 12 months and eventually made a full-recovery. At the end of his 12 months of treatment, my client made the unreasonably low demand of $7,500. Geico responded by making my client a top offer of $1,500. Trust me when I say such an offer would be funny if it was not so insulting to my client who had suffered for 12 months with back pain that very much reduced the quality of his life. My client of course did not accept this offer. We went to arbitration and the arbitrator quadrupled Geico’s offer, giving my client an almost $6,000 award PLUS attorney fees to me because we beat Geico’s pre-suit offer of $1,500. This should not have been a surprise to anyone. This would be an expected award for a case like this—especially to a client like mine who is very likeable and credible. So how did Geico respond? They appealed the arbitrator’s award, and in November, we have a trial to dispute a claim for $7,500—a complete waste of jurors’ time, the parties’ time, the judge’s time, and the time of court staff. The only person who will likely come out ahead in all of this is me because Geico will very likely have to pay me additional attorney fees.

A similar case went to trial in Multnomah County two weeks ago. The plaintiff in that case, an 83-year old great-grandmother won almost $10,000 at arbitration, but instead of paying what they owed her, Geico appealed the award to a full jury trial. The jury awarded the grandmother an almost identical award as the arbitrator, plus a whole lot more in attorney fees. At trial, it was revealed that Geico had spent at least $8,000 in hired guns to come in and testify that Grandma was not hurt very bad. There is no way of knowing how much Geico spent hiring its own attorneys, but $15,000 would be a conservative estimate. And because Geico lost, it had to pay Grandma her attorney fees, which I expect were close to $30,000. Do the math. Geico spent somewhere in the range of $60,000 because it wanted to avoid paying Great-Grandma a few thousand dollars.

The result of all of this is that when a new client comes into my office and says, “I was in an auto accident,” my first questions are, “Was the other driver insured, and if so, who was his insurer?” If the answer is Geico, I tell them to prepare for a long, slow grind.

Some may see Geico’s behavior as tough, macho, or somehow noble. What these people do not understand is that Geico’s litigious practices are just as tough on those who have Geico insurance as those who are hit by someone with Geico insurance. The reason for this is that if you cause someone to be injured by your driving, your insurance usually takes care of it, and you are not much involved. It’s a pretty easy process, and that is how it is supposed to be. That is why we buy insurance. With Geico, however, you run a nearly 100% chance of being sued.

Being sued, even if you get free legal representation provided by Geico, is not fun. It means you are going to be deposed. This is where you are put under oath and an attorney hostile to your interests is going to spend hours asking you every personal detail of your life in search of a nugget he or she can share with a jury to make you look bad in public. A private investigator may look into your past and interview prior acquaintances who may have less-than favorable opinions about you. Then you have to go to an arbitration and then a trial where you have to take time off work and sit through days of mindless court proceedings and then get put on the stand where your past is made public and you are made to look dishonest and reckless. That is what your Geico policy gets you.

Geico actually does win some of its trials. This is usually done by hiring a team of doctors (the same ones almost every time) whose sole job is to write reports for insurance companies and testify at trial how they know the plaintiff was not hurt despite never meeting the plaintiff. The challenge for plaintiffs and their attorneys is that unlike insurance companies, we cannot afford to bring in orthopedic surgeons and biomechanical experts at a cost of $10,000 for a shot at winning $7,500. All we have is usually the primary care physician or chiropractor who will come in and say, “I treated this person the day of the accident and once a week for the next six months. They were really hurt.” Sometimes juries reach verdicts based on the number of doctors testifying (plaintiff loses), or by the credentials of the doctors testifying (plaintiff loses), or how well the doctors testify (again, plaintiff loses because often times this will be a chiropractor’s first time in a courtroom versus an insurance doctor who is in court three times a week). What these numbers show is that even when Geico “wins,” it loses. It does so because it spent more money than the case was worth and just put its insured through an unnecessarily miserable process.

Every time Geico loses one of these “small” cases (e.g., spends $60,000 for nothing), and even when it wins (e.g., spends $20,000 to save $5,000), those costs are absorbed into rates. A Geico supporter may say that such a strategy has long term gain that cannot be easily measured, such as discouraging injured persons and their attorneys from taking these cases. I have found though that quite the opposite is true. I have yet to meet an injured person who knows Geico fights every penny to the death, and when a personal injury attorney has a case against Geico, he or she works twice as hard. This is because the attorney knows this case is going to be litigated through trial and the attorney will be getting his or her attorney fees if the attorney can beat what is typically an abysmally low pre-filing offer (in fact, writing this article is against my self-interest as going up against Geico has so far proven to be a profitable endeavor for me). Further, even if this cynical strategy did actually reduce costs for Geico and its customers, is this strategy ethically defensible? Is it really okay for an insurance company to save money for insureds and shareholders by discouraging those who are truly injured from recovering what is rightfully owed to them?

In the end, Geico is a very bad neighbor. Its ad campaign is light-hearted, but its claims adjusting practices are cynical and cruel. If you are involved in an accident, pray it is not against someone with Geico insurance, and if you have Geico insurance, for God’s sake, change insurance companies. Maybe if enough people vote against these practices with their feet and purchase other auto coverage, we will see positive changes from our worst auto insurance company.

-Dylan

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4 Responses to “Saving 15% Never Cost You So Much: Geico’s War Against You”

  1. Anonymous Says:

    gggg

  2. I have Geico and want to switch to another insurance company after hearing you on Carl Wolfson this week. You mentioned some companies that are better—would you mind going over those again? I was rushing out the door but really appreciated what you had to say.

    • Caris – Thanks for listening. Keep in mind it is all relative. There is no insurance company you get too excited about. In my experience, the smaller the company, the easier they tend to be to work with. If an insurance company’s letter comes across my desk and I have never heard of them, it is usually a good sign. The big ones (Farmers, Allstate, Geico) tend to be the worst. I know a lot of people who have State Farm and say they are the one big guy that is good, but in my practice, I have found them as difficult to work with as Allstate and Farmers. The only big one that I usually hear good things about is Nationwide. In my research for this article, the company I found at the top of most lists was Amica Mutual. It also makes a lot of difference which adjuster gets assigned to your particular claim. A good or bad adjuster (regardless of which company they are with) can make all the difference. Unfortunately, there is no way to pick your adjuster. Good luck!

  3. Michael Morris Says:

    Thank you so much for this blog. My nutshell story is that I had Geico for 8 years and was rear-ended in September 2016. I was sitting still in traffic and was hit at 55 or 60mph by an impaired driver. Fast forward, he was uninsured so I filed an uninsured motorist claim with Geico. I settled on the totaled car but am now left fighting with them over medical bills, loss of work and pain & suffering. My demand was $17K ($7k medical and loss of work, $10K p & s). Im self employed so they are fighting me on my lost wages and have told me that I received duplicate treatment from 2 different chiropractors, so they are only trying to pay for one. I have documentation of the different treatment and techniques received from both, but they don’t seem to care. In the end, as of today they have offered me a total of $3800, which I declined. I told them this morning that I would be seeking arbitration. So my question is…what is my next step? Do I contact an arbitrator? A side note, my passenger sustained the same injuries as I did and had similar treatment. I didn’t have medpay on my policy, so he turned is claim into his insurance (State Farm) and they paid his claim in the amount of $11K for medical, loss of work and P&S. No questions asked. It is insane that I am having so many issues with my insurance company. They are fighting me on every single thing. Any help or direction that you can give would be greatly appreciated.

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