August 29, 2021

Geico Auto Insurance, which has faced a series of legal battles, is now claiming a $1.2 billion hit from a law that will ban insurers from charging people more than $2,000 for auto insurance.

According to a report by Bloomberg Businessweek, Geico has filed a lawsuit against the US Department of Justice seeking a declaratory judgment that it can no longer charge consumers more than the threshold amount to qualify for auto policy.

Under the US Consumer Financial Protection Bureau (CFPB), insurers are allowed to charge people $2 and above for auto coverage.

Geico claims it cannot charge more than that for policies it offers, as it would not have sufficient funds to cover any claim.

The firm has been in talks with the Justice Department, the report added.

The US Department has been working to extend the mandate that requires all auto insurance policies to cover at least 50 percent of the cost of car repairs, and Geico is expected to be one of the first companies to seek a relief from the new law, which was approved by Congress in February and signed into law by President Donald Trump.

Geicos first suit filed against the CFPB in 2017 claimed that it was illegal to charge more for auto premiums than $1,500, but the company settled that suit in 2019.

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