When Purchasing Insurance Buyer Beware

Updated April 2, 2021.

If you have ever wondered how insurance companies that spend enormous sums of money on advertising campaigns with television commercials can have the lowest rates you are not alone.  Unfortunately, some consumers do not realize their company may not really be much of a bargain until it’s too late. According to Insurance Business America, GEICO, the second largest auto insurer in the United States, has been accused of systematic fraud in a major lawsuit. The lawsuit, filed by Florida Spine and Joint Institute, alleges that GEICO denied claims for legitimate medical services covered by their patient’s automobile insurance policy. GEICO is no stranger to lawsuits. According to Expert Institute, GEICO is also facing a class action lawsuit from its customer base in Illinois alleging that the company engaged in deceptive marketing practices and charged excessive premiums. The class action complaint explained that car crashes dropped by more than half in 2020 because Illinois’ COVID stay-at-home order caused fewer people to drive. With fewer accidents and, thus, fewer payouts by GEICO, the complaint alleged that GEICO obtained a significant windfall. The complaint alleges that GEICO ignored this data and continued basing premiums on overstated expectations about insurance claim risks.  In essence, the plaintiff alleges she was induced to pay more for a policy than it was worth due to GEICO’s deceptive and unfair practices.  

It is important to choose your insurance company carefully. Go beyond price and look at consumer rankings. Don’t start on the company’s website. Look at independent comparisons such as Consumer Reports or bizrate.com. Explore statistics on complaints compiled by the New York Department of Financial Services – the regulatory body for New York Insurance carriers. For example, the New York Department of Financial Services in 2019 ranked automobile insurance companies based on complaints it received. The companies with the fewest upheld complaints per million dollars of premiums appear at the top of the list

Ask someone you know who has had a significant claim, such as a fire loss or an auto accident with injuries, if they were happy with their company. Don’t accept satisfaction with handling of small claims, like a deer strike or broken glass, as evidence of good claims handling practices. It is large claims where the insurance carrier has to pay significant amounts where some carriers may cut corners by denying claims. If you are hurt in an auto accident for example, your insurance carrier should be paying your medical bills and lost wages. Some carriers may send you to a doctor on their payroll who may opine that the treatment you seek is not necessary or that your injury is not related to the accident. A denial of your claim could have devastating results for you and your family.  


Like so many things in life, planning ahead is critical. Take the time to research your insurance company now, before you have a claim. If you or a loved one have suffered personal injuries in a car accident the attorneys at Lacy Katzen LLP can help. Please call for a free consultation.


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