Geico Insurance Settles $5.2 Million Lawsuit

Geico insurance has recently settled a lawsuit for $5.2 million following a class-action lawsuit filed by policyholders who alleged that the company’s online premium quotes were discriminatory against unmarried women and widows.

Background

Geico, which stands for Government Employees Insurance Company, is one of the largest car insurance companies in the United States. The company was founded in 1936 and is based in Chevy Chase, Maryland. It offers a wide range of insurance products, including car insurance, home insurance, and life insurance.

In 2014, Geico was accused of using a discriminatory algorithm that resulted in higher premiums for unmarried women and widows. This algorithm allegedly took into account the marital status of the policyholder and used it as a factor in determining the premium rate.

On the basis of this allegation, a class-action lawsuit was filed against Geico in 2016. The lawsuit claimed that the algorithm was in violation of the Fair Housing Act and the Equal Credit Opportunity Act, both of which prohibit discrimination based on certain protected classes, including sex and marital status.

The lawsuit was brought on behalf of all unmarried women and widows who had been insured by Geico in the previous three years.

The Settlement

The $5.2 million settlement was reached in 2020, four years after the lawsuit was filed. The settlement will be divided among the eligible policyholders, who will each receive a share of the settlement amount.

In addition to the monetary settlement, Geico has agreed to stop using the allegedly discriminatory algorithm and to revise its underwriting practices to ensure compliance with federal anti-discrimination laws.

FAQ

What was the basis of the lawsuit against Geico?

The lawsuit alleged that Geico was using a discriminatory algorithm that resulted in higher premiums for unmarried women and widows. This algorithm allegedly took into account the marital status of the policyholder and used it as a factor in determining the premium rate.

Who was affected by the alleged discrimination?

The alleged discrimination affected unmarried women and widows who had been insured by Geico in the previous three years.

What was the settlement amount?

The settlement amount was $5.2 million.

How will the settlement amount be distributed?

The settlement amount will be divided among the eligible policyholders, who will each receive a share of the settlement amount.

What other changes has Geico agreed to make?

In addition to the monetary settlement, Geico has agreed to stop using the allegedly discriminatory algorithm and to revise its underwriting practices to ensure compliance with federal anti-discrimination laws.

Conclusion

The settlement of $5.2 million and the agreement by Geico to change its underwriting practices will hopefully prevent future discrimination against unmarried women and widows. It is important for companies to ensure that their practices do not violate federal anti-discrimination laws and that they treat all customers fairly and equally.