Bloomberg Law
June 23, 2022, 9:00 AM

ANALYSIS: GEICO’s Costly Car Insurance Gamble Is Cautionary Tale

Erin Webb
Erin Webb
Legal Analyst

GEICO may be on the hook for millions more than it bargained for after declining to settle a legal claim against a policyholder for $1 million.

The policyholder was romantically involved with a woman who threatened to sue him for negligence after she contracted a sexually transmitted disease in his car. The auto insurer denied coverage and withdrew from the matter entirely. The parties then agreed to arbitrate the claim, and the woman was ultimately awarded $5.2 million in arbitration.

GEICO’s decision to deny and withdraw opened the door to a potentially larger payout than GEICO would otherwise have faced. ...

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