Most people associate GEICO with the gecko these days – thanks to its usual outstanding advertising. But the term GEICO, of course, has nothing to do with geckos. Instead, it stands for the Government Employees Insurance Company – a throwback to its roots in the 1930s.
About GEICO auto insurance
The company was founded by a USAA executive who was frustrated because USAA, of course, was dominated by former military officers, and he was a civilian. So he got tired of being passed up for promotions, left and founded GEICO – based on a similar business thesis: Government employees were easily marketed to and overall were good risks as drivers. If he could peel off a significant chunk of this risk pool from other insurers, he could make money.
Both GEICO and USAA also concentrated on selling policies direct, saving money by bypassing the agent. USAA went with a mutual business structure, however, while GEICO remained wholly owned by investors, rather than policyholders.
GEICO’s business strategy has long been to take the savings from eliminating the local insurance agent and throw it into advertising. It deals in bulk, and buys up as much ad space as it can get. And according to one of its big investors, Omaha billionaire Warren Buffett, who owned much of the company via his holding company Berkshire Hathaway, it is constantly looking for ways to buy more.
As a result, GEICO has succeeded in obtaining what marketers call “top of mind awareness.” Ask a random group of 100 Americans to name the first three auto insurance carriers to come to mind, and almost all of them will include GEICO.
So how does GEICO auto insurance do with customers?
Overall, the Viewpoints community rated its experience with GEICO at 75 points out of 100, while the overall score for insurance companies is 68 points—an impressive showing, considering how tricky claims management is in the auto insurance world.
As always, we look first and foremost at claims experience. After all, the lowest premiums in the world are meaningless if the company doesn’t pay claims in a reasonable and timely manner.
Well, here are some happy Viewpoints readers:
“I have been insured by Geico for over 4 years and my rates have never increased. I had an auto accident 2 years ago and Geico was very prompt in arranging a rental car, assessing the damage, providing me with money that my car was worth, and keeping me updated through phone calls and emails. Even after the accident my rates didn’t increase; however, I did take a drivers course to keep the citation off my record. The experience I received following my accident has made me a loyal customer because I wouldn’t want to risk getting a bumpy experience by another insurance company if I was to ever get into another accident.” —D1982pickle, Reviewer since 2009
“I absolutely love working with Geico. I have had several claims, and I have been utterly impressed with how well everything has gone. It’s unbelievable how supportive these guys are both on the phone and in person. Not everything has gone smoothly always (things happen), but these guys are absolutely on my side and made a huge effort to take care of things immediately. Everything to my satisfaction.” —nilbus, Reviewer since 2011
“Then about 4 months after we switched the unthinkable happened and I was in an accident with my children. My husband made 1 phone call and everything was taken care of! They have also called back several times to let me know what stage the claims are in and answered all of my questions quickly and thoroughly.” —CarenMills, Reviewer since 2009
“In 1999, my dad was hit by another motorist and his car was totaled. In less than 2 days he had a rental car and in less than 2 weeks had received his check and was driving a new car. When my car was hit by a motorist in 2004 and totaled, I also received a rental in less than 2 days. And although it was the middle of the Christmas holidays, I had received my settlement and was driving a new car by the first week of the New Year (2005). Then (I know if I didn’t have bad luck, I wouldn’t have any luck at all), the car I’d purchased in 2005 was stolen in mid-April of 2007. Once again, GEICO worked quickly and diligently to reserve a rental car for me (at no charge–as part of my coverage and because my car had been stolen) and by the 1st week of May I had used the settlement to make the down payment on my current vehicle. Throughout all of the mishaps, tickets, and other car tragedies, my insurance rate has always been more than reasonable, which is always great news for a single mother like myself, who’s living on a budget. The only downside is that the local offices (at least the one in Sumter) do not take cash payments although they do take payments by credit card or check (this is a problem for me since I don’t have either type of account). So as for this car and any other car I’ll own in the future, it will be insured by GEICO.” —parkerv, Reviewer since 2008
Overall, GEICO impresses most of our reviewers, but here’s an example of an unhappy customer:
“Don’t use Geico, my car was hit, paid the deductible of $500, had it repaired, and they told me they would reimburse me the money once they were able to get it from the other persons insurer. A year later, they sent me a message stating sorry, we won’t get the money, good luck in small claims court.” —stirge, Reviewer since 2012
Note: It looks like this reader isn’t located in a no-fault state. In these states, insurers are required to pay out to their own policyholders regardless of fault, and then fight it out themselves, insurer vs. insurer in court under a specialized area of law called subrogation law. This isn’t something you should need to worry much about if you live in a no-fault state, though.
Looking at a broader data set, the 2013 JD Power Auto Insurance Study, released in June, gave GEICO top marks for claims satisfaction as well as policy offerings. GEICO did particularly well in the central United States.
Anecdotally, I do get quite a number of reports that people are able to save on GEICO if they shop around. There is a great deal of variability in pricing based on zip code, the number of miles you drive, and many other factors. You may be in a particularly good position to save if you have other policies, such as life and homeowners insurance policies, with a given carrier and they offer a discount for having multiple lines of insurance.
Overall, GEICO appears to be a solid choice for auto insurance, however, by any metric.