Legal Question in Insurance Law in Rhode Island

I have a question regarding my Automobile Insurance Company.

I have been enrolled in Automatic Payments which have been set up for the 5th of the month. Luckily, I checked my account today and found out that they moved the date to the 22nd of the month, 13 days earlier than I expected to have this money withdrawn from my account. (If I had not caught this, my account would have been overdrawn and I would have bounced checks)

When I contacted GEICO, they could not explain this and said that they would change it. Upon changing it, now my payment has increased!

Is this a type of fraud? I am being taken advantage of as a consumer and I need some legal advice.

Asked on 10/13/09, 8:25 am

1 Answer from Attorneys

Christopher Pearsall Law Office of Christopher A. Pearsall, Esquire

I am familiar with GEICO and have personally been a customer for years. With that being said, I do not believe that this is a fraud being perpetrated against you. The terms of the automatic payments provision may allow you to schedule a particular date of payment for each month. However, Automatic Payments provisions are contracts between you and GEICO separate and apart from your insurance policies themselves. Automatic Payments provisions vary for GEICO based upon when they were placed in affect, and the types of insurance involved. I suggest you ask GEICO for the provisions of the Automatic Payments contract so that you can see what rights you may have given to GEICO.

For instance, when using Citizens Bank of Rhode Island and its Bill Pay services, most people do not read the Bill Pay contract terms and would be surprised to find that Citizens Bank has the right to adjust the payment date based upon weekends, holidays and agreements that Citizens may have regarding payment of bills with the particular company you are paying because of that company's billing cycle. It therefore sometimes appears that Citizens Bank of RI is changing your choices on your account with your money. It appears offensive when in fact, you may well have agreed to give Citizens Bank of Rhode Island the right to make these adjustments as necessary without confirming them with you just to enable the bill to get paid.

The increase in rate is a different issue though. I would check with GEICO and ask them to explain the increase in premium. It may be that the premium was recalculated based upon commuting mileage that you represented when you submitted the application for the policy or which you updated on a yearly basis. However, if GEICO has enough information to readjust your rate and has not readjusted your preference coverage then they certainly may do this. A change of address may account for this. If the address on the account that payment comes from evidences that your bank account shows you live further away from work than represented, this may be a reason to adjust your policy premium upward. If there was a motor vehicle violation for you or a member of the family that is on the policy that was previously overlooked but has come to light, this would justify an adjustment by GEICO.

Check to see if you were in a recent renewal period. Did you return all the signed documents required to relinquish different kinds of coverage that you may waive or refuse? If you failed to provide the required paperwork, this may account for the increase.

If you are up for renewal on your policy and Geico runs your credit report only to find that your credit score has dropped significantly then you may be shifted to a higher risk pool based upon the risk associated with your ability to pay. Discovery of a member of the household that is not listed on your policy but is of driving age could also account for the company's unilateral adjustment.

Lastly, If you call and speak with one agent at GEICO, call 2 more times to try to get your answers. Make sure you get a different person each time you call. Try to confirm the same information three times. Invariably there may be newer trainees who are not as well versed as seasoned customer support representatives at GEICO. If one agent cannot explain the discrepancy in date changes or premium changes, speak with at least two more agents or even call the local office in Middletown, RI for assistance. There MUST be a reasonable explanation for these changes. I most certainly do not believe it is any kind of fraud being perpetrated upon you. However, something certainly is amiss here or is not being conveyed properly and I am confident that perseverence will ultimately get you the answer. I do not believe the GEICO is endeavoring to perpetrate a fraud upon you. Most companies know that people pick a draft date for their payments when funds are available. Changing the date does not benefit GEICO because it risks angering the client and that the funds won't be available to cover the policy premium. That is not to GEICO's benefit and increases its operating costs. That is not something GEICO wants to do and it is known for its elimination of operating costs.

The policy premium change must be trackable in their system somehow. You are still entitled to an outline of your premium and what it covers for each vehicle. Request that from GEICO and you will see where the difference is and be able to pinpoint your questions as to why the increase occurred.

Together, these things should help you resolve both issues relatively quickly. Keep an eye on your account for a few months for the drafting date for your policy premium to make sure it stays on track. It is possible that the shift was a one-time computer error that may never happen again.

I hope you find this helpful. Should you need further assistance, please do not hesitate to contact me to set up a coaching session on this separate issue which often dovetails with Rhode Island Divorce and Family Law and keeps me "in the know" regarding such issues.

My very best to you in this situation. I am happy to be of service to you.

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Answered on 10/26/09, 8:58 pm

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