GEICO Hit With Lawsuit Over Alleged Accident Forgiveness Scheme

Case Overview: A class action lawsuit accuses GEICO of misleading customers about its Accident Forgiveness coverage, alleging hidden surcharges.

Consumers Affected: GEICO policyholders in Texas with Accident Forgiveness who saw premium increases after an at-fault accident.

Court: U.S. District Court for the Northern District of Texas, Dallas Division

GEICO lures customers in with promises of financial protection through its Accident Forgiveness coverage, only to impose steep rate increases under the guise of "surcharges" once they file a claim, a new lawsuit claims.

The lawsuit accuses the company of saying the policy protects drivers from premium hikes after their first at-fault accident, only to impose hefty fees once a claim is made.

GEICO Accident Forgiveness Program Under Fire in New Lawsuit

Texas resident Christopher Cude filed the proposed class action lawsuit after he said GEICO charged him significantly higher premiums despite awarding him Accident Forgiveness coverage. 

According to the complaint, Cude and his wife had been insured by GEICO for years when they were notified that they had earned the Accident Forgiveness benefit, which the insurer describes as a safeguard against rate hikes following a driver's first at-fault accident.

However, after Cude’s wife was involved in a “minor fender bender” in October 2024, he was stunned to receive a renewal notice from GEICO showing his premium had jumped from $1,392.20 to $2,663.70—a staggering 91.3% increase, the lawsuit states. 

When he contacted the insurer to dispute the charge, GEICO allegedly claimed that his premium had not actually increased but that a "surcharge" had been applied instead.

Customers Allege GEICO Deceptive Practices with "Surcharges"

The lawsuit argues that GEICO spends billions marketing itself as a fair and honest insurance provider, heavily promoting its Accident Forgiveness program. The insurer’s website and advertisements state that customers who qualify for the benefit “won’t see their insurance rate go up as a result of their first otherwise surchargeable, at-fault accident.”

However, the lawsuit claims GEICO manipulates policy language to artificially raise premiums for customers with Accident Forgiveness, calling the increases "surcharges" instead of rate hikes. 

Plaintiffs argue this practice is a deliberate effort to mislead customers into purchasing coverage that does not deliver the protections GEICO promises.

GEICO's Legal History Includes Wins and Losses

This is not the first time GEICO has faced legal challenges. The insurer recently agreed to pay approximately $8 million to settle two separate lawsuits—one involving wage and hour violations alleged by auto claims adjusters in Maryland and New York, and another brought by policyholders in New Jersey who claimed GEICO failed to cover title or registration transfer fees after their vehicles were deemed total losses.

On the flip side, GEICO has also had legal victories. In one case, a federal appeals court ruled in its favor, allowing the company to recover nearly $700,000 from a spinal clinic that allegedly submitted ineligible reimbursement claims. In another high-profile case, a court ruled that a woman who contracted HPV from her partner during an encounter in a GEICO-insured vehicle was not entitled to damages from his auto policy.

In his lawsuit against GEICO, Cude wants to represent anyone in Texas insured by GEICO with Accident Forgiveness whose premiums increased following the first at-fault accident caused by an eligible driver on the policy. He is suing for violations of the state’s business laws and seeking damages, injunctive relief, fees, costs, and interest.

Case Details

• Lawsuit: Cude v. Government Employees Insurance Company D/B/A GEICO
• Case Number: 3:25-cv-00475-N 
• Court: U.S. District Court for the Northern District of Texas, Dallas Division 

Plaintiffs' Attorneys

• Bruce W. Steckler, Austin P. Smith, and Paul D. Stickney (Steckler Wayne & Love PLLC)

Do you have GEICO's Accident Forgiveness coverage? Share your experience in the comments below.