Buffett-backed GEICO may face class action

Repair payments put giant of US auto insurance under the spotlight

Buffett-backed GEICO may face class action
by Timothy Montales

VIP Auto Glass Inc., a Florida-based automotive glass company, has issued a class-action lawsuit against Geico General Insurance Co.

Originally filed in the 13th Judicial Circuit Court in Florida, the lawsuit accuses Geico of utilizing arbitrary price comparisons to establish a “prevailing competitive price” for its reimbursements to automotive glass companies, so that it could possibly pay less.

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“Defendant has an internal memorandum called the ‘GEICO Glass Pricing Agreement’ (dated September 11, 2008), where Defendant itself sets the price it will pay to the company’s repair facilities if one of Defendant’s insureds obtains windshield repair or replacement service,” the plaintiffs claimed.

Geico’s established prices are significantly lower than the NAGS benchmark list price, the complaint stated, as reported in an article by Fender Bender.

“Most companies bill what NAGS says to bill, but Geico says, ‘No, we’re 45-50% below what NAGS says,” Atty. Dan Clark, Clark & Martino, PA, stated in a glassBYTEs.com article.

The case arose following a February incident where Deryl Jones – listed in the court records as the “insured customer” – had his windshield repaired and replaced by VIP Auto Glass, in accordance with Jones’ insurance policy. Following the completion of the repairs, Geico allegedly underpaid VIP Auto Glass for its work, paying what it stated to be the “prevailing competitive price” for repairs.

VIP Auto Glass is chasing declaratory and injunctive relief, while both sides have until January to exhibit proof for a judge to determine if the case is a class action suit.

Related stories:
GEICO to hike auto rates by 4.4% from June
Twenty six people charged in insurance fraud ring

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