New Jersey insurance regulators have accused Geico of overcharging motorists by $10.5 million, imposing a $1.2 million penalty on the Maryland-based insurer and its affiliates over what officials described as a “systematic pattern” of improper business practices.

The enforcement action arrives as drivers across New Jersey grapple with rising insurance premiums, putting additional pressure on household budgets and intensifying scrutiny of how insurers calculate rates and handle policyholders.

The state Department of Banking and Insurance's consumer protection office launched its investigation in September 2024 after receiving complaints about Geico's underwriting and rating practices, claims handling and policy cancellations. The department published its findings Tuesday.

Investigators reviewed the company's activities from June 2023 through May 2024 and identified violations affecting more than 15,000 policyholders.

NJ $10M Car Insurance Fine Follows Investigation Into Geico

The investigation uncovered several alleged violations, including charging premiums above rates approved by the department and canceling policies for improper reasons. Regulators also found that certain notices lacked required language concerning potential policy nonrenewals.

Additionally, investigators determined that policyholders who retained vehicles declared total losses were not properly informed of their rights.

Together, the findings prompted regulators to impose the $1.2 million penalty and recommend changes to the companies' procedures. The $10.5 million in alleged overcharges represents a separate financial issue involving premiums collected from customers.

Refunds Begin as Regulators Demand Changes

According to the department, Geico began refunding customers who had been wrongfully charged premiums while the investigation was still underway.

Susan Ochs, the department's acting commissioner, said the agency works to stop improper business practices that harm New Jersey residents. Its oversight extends beyond auto insurance to life, health, managed care, and property and casualty insurers, with the goal of ensuring compliance with state law and fair treatment of consumers.

“This penalty settlement and the corresponding refunds to policyholders demonstrate our commitment to fostering the trusted, accountable, healthy marketplace that will best serve New Jerseyans,” Ochs said in a statement.

The enforcement action covered Geico and four affiliated companies: Geico Secure Insurance Company, Geico Choice Insurance Company, Geico Indemnity Company and Geico Casualty Company.

Rising Premiums Intensify Pressure on New Jersey Insurers

The penalty comes against a backdrop of mounting frustration over the cost of car insurance in New Jersey, which consistently ranks among the 10 most expensive states for coverage.

Consumer advocates have criticized the insurance department for approving most requests for premium increases. They argue that regulators should do more to protect drivers as inflation and broader affordability concerns continue to squeeze household finances.

Records obtained by the New Jersey Monitor earlier this year through public records requests show that Geico and its affiliates sought rate increases ranging from 6.8% to 26.3% in 2024, the year the investigation began. The department approved increases ranging from 6.8% to 19.1%.

Those figures highlight the tension between insurers seeking higher premiums and consumers struggling to keep coverage affordable.

Dispute Over How Insurers Calculate Rates

Consumer protection advocates have also challenged the factors insurance companies use to assess risk and determine premiums.

They have urged lawmakers to prohibit insurers from considering characteristics they regard as discriminatory or unrelated to driving performance, including a motorist's education, marital status, occupation, ZIP code and credit history.

The insurance industry has opposed such proposals, and lawmakers have yet to take action on the proposed restrictions.

The debate raises broader questions about how insurers balance risk assessment with affordability and fairness, particularly in states where drivers already face steep premiums.

How New Jersey Residents Can File Insurance Complaints

The Department of Banking and Insurance advises residents experiencing problems with an insurance company to submit a formal complaint through its online complaint portal.

Consumers can also contact the department by calling its hotline at 800-446-7467 or 609-292-7272.

For drivers facing rising premiums, the Geico case underscores the importance of regulatory oversight, transparent pricing and accountability when insurance companies fail to follow state requirements.