Patriot Penalty: Deployed service members come home to find higher auto insurance rates

Veteran and industry watchdog call for laws to protect recently-deployed military

Patriot Penalty

(InvestigateTV) - In the middle of a baseball diamond, the Geico gecko takes the microphone. His message is a salute to the military.

“Geico would like to take a moment to say thank you to our military members at home and abroad for all their hard work and sacrifice,” he says.

But InvestigateTV has found that commercial may be a little disingenuous.

In some cases, companies, including Geico, quote servicemembers with higher auto insurance rates when they come home from deployment.

“It makes me so angry they get away with that ad,” said Doug Heller, a nationally-recognized insurance expert with the Consumer Federation of America. “Because I know what Geico does for soldiers. They charge them more for auto insurance.”

InvestigateTV’s analysis of quotes across the country shows that in many places Geico gives military members who have been deployed higher rate quotes than their civilian neighbors.

“The idea that insurance companies can take soldiers with perfectly good driving records and charge them more because they were deployed overseas, it’s just objectionable. It’s like a patriot penalty,” Heller said.

The state commander of Louisiana’s Veterans of Foreign Wars, Mickey Carroll, said this practice is unacceptable. As someone who deployed to Vietnam at 18-years-old, he’s angry that young active duty military members are facing potentially higher bills.

“It infuriates me. It’s an injustice. To penalize somebody for serving their country is an injustice, and it should be fixed,” Carroll said.

Carroll said it’s hard enough for military members to make ends meet without added expenses that come as the result of their duties.

“It’s so hard for a young person to make it on what they’re paid,” he said. “All the other demands that a person needs today, everyday expenses, you don’t need something like this to burden you.”

Mickey Carroll, the commander of the Louisiana VFW, says he was shocked to find out that recently-returned service members may be quoted higher auto insurance rates. “I can’t tell you how upset it makes me. To penalize these young men and women who are going off to serve our country and take the risks they do, and then come back and be penalized additional fees added on simply because they had to leave the country, they were ordered to leave the country by the commander in chief," he said.
Mickey Carroll, the commander of the Louisiana VFW, says he was shocked to find out that recently-returned service members may be quoted higher auto insurance rates. “I can’t tell you how upset it makes me. To penalize these young men and women who are going off to serve our country and take the risks they do, and then come back and be penalized additional fees added on simply because they had to leave the country, they were ordered to leave the country by the commander in chief," he said. (Source: Owen Hornstein, InvestigateTV)

InvestigateTV finds higher insurance quotes in at least 22 states

Geico’s website auto insurance quote tool makes it easy to check premiums based on various factors, including recent deployment. InvestigateTV used the estimation tool to analyze how that factor would change quotes.

To examine the rates, InvestigateTV went through Geico’s series of questions. In each state, the analysis included two trials. In the first, answers to the questions gave this profile: A 29-year-old man who was single, renting his home, financing his car and working in the sales industry. He was looking to switch insurance companies.

In the second trial, the answers gave an identical profile with one exception: the man’s auto insurance lapsed due to deployment.

In 22 states, InvestigateTV found that someone whose auto insurance lapsed because he was deployed overseas received a higher estimate from Geico on a six-month premium than someone who had insurance.

In North Carolina, for a six-month policy, Geico quoted the civilian $527. The company quoted the recently-deployed soldier $682. That’s a $155 difference.

In some states, like Louisiana or Tennessee, the price of insurance skyrocketed by 45% for someone who had returned from deployment.

The only state that did not have an insurance estimate tool available was Michigan.

Heller said the analysis clearly shows the insurance company doing different things in different states, meaning there is not a sound reason to charge recently-returned military members more money.

“We have proof that this is a totally illegitimate way of rating people,” Heller said. “They’re making a corporate decision to punish where they can and not where they can’t. The proof in the pudding is the fact that they do it differently in different states.”

He said he suspects different regulators in different states are what cause the variation in whether a state shows higher or lower rates: “Where they can get away with it, where they can squeeze a few extra dollars out of soldiers or anybody, they will.”

Heller said a lapse in coverage is something insurance companies look at for risk factors, but military members should not be in a similar category as someone who simply stopped paying – but kept driving.

“This is not just sweeping soldiers up because of some kind of generic penalty they put on people who were previously uninsured,” Heller said. “Geico knows precisely the reason that these soldiers were not insured. They know that the soldiers had a solid, duty-bound reason to have dropped their insurance for 18 months. And yet they still penalize them.”

Further, unlike a driver who had lapsed coverage but continued to drive, service members are canceling a policy on a car they aren’t driving. “In most states, the insurance that you’re required to buy is only to protect the people that you hit if you cause an accident,” Heller said. “If you’re serving overseas, if you’re 15,000 miles away from your car, you’re not going to hit anybody. There’s no liability to cover.”

‘It should be the law in every state’

In some states, like Florida, specific laws protect veterans from being charged extra for insurance. In other states, like California, veterans fall under the umbrella of laws that protect anyone from being financially penalized.

Former Florida state Senator Steve Geller wrote the law that stops this from happening in his state. He proposed the legislation after active duty military members complained to the insurance commissioner.

Particularly, National Guard and Reserve members were getting deployed in increasing numbers – and noticing the increased charges when they came home.

“They’re already making huge financial sacrifices. They’re already making sacrifices to their family, to their lives. They’re at risk of grievous bodily injury, and it is just adding insult to injury to say that when you come back, we’re now going to charge you more for your auto insurance,” Geller said.

While Geller said he understands insurance companies must assess the risk a person has if they are uninsured for a period of time, he said this should not apply to people who leave the country on military orders.

“To try and apply that to people that are being summoned by the United States government to go and defend our country is repulsive. It is un-American. It is annoying. It just should not be done,” he said.

Former Florida Senate Minority Leader Steve Geller discusses the law he got passed in 2005 that prohibits insurance companies from increasing rates for military members back from deployment. “Once we did this, I never heard another complaint about it. Because the insurance companies knew about it,” Geller said.
Former Florida Senate Minority Leader Steve Geller discusses the law he got passed in 2005 that prohibits insurance companies from increasing rates for military members back from deployment. “Once we did this, I never heard another complaint about it. Because the insurance companies knew about it,” Geller said. (Source: Mark Klatman for InvestigateTV)

Geller, who is now the vice mayor of Broward County, Florida, said he hoped other states would follow his state’s approval of the protective law.

“I am surprised that this problem is still going on. We passed this legislation 14 years ago,” Geller said. “I would have thought that this would have been part of a national trend, that all states would have passed this by now.”

Geller said once he introduced the legislation, there was not much pushback – not even from the insurance industry, at least in public.

“They didn’t even fight us on this one. Because how does the insurance industry stand up and try to justify [this]?” Geller said. He said since the law passed in Florida, he has not heard complaints about military members facing higher rates. Part of the reason, he said, is the financial penalties built into the law are forceful. Insurance companies can be charged tens of thousands of dollars for violations.

‘Nobody has any idea’

Geico did not respond to InvestigateTV’s requests for comment.

Instead, a representative of the lobbying group American Property Casualty Insurance Association (APCIA) answered questions. The executive chairman of Geico, Tony Nicely, is listed as a board member of that trade association.

“It’s news to me that some companies are [quoting higher rates]. I rather suspect that it’s something that’s been overlooked or misunderstood,” said Dave Snyder, APCIA’s vice president for policy, research and international.

He pointed to the common stance of insurance companies that a lapse in coverage can indicate a risk, but he said servicemembers have a unique circumstance.

Snyder’s advice to military members is to be proactive and go to their insurance agents.

“[Consumers] have more power than I think a lot of folks understand. Go back to the company. Go back to the agent. Say, ‘This is really weird. I was deployed defending my country, and I get a higher rate. This is a problem. Do something about it,’” Snyder said.

However, Heller said most people would not even know to ask. Geico’s online tool made it easy for InvestigateTV to compare rates between civilians and servicemembers. But not every company has detailed quote tools online.

Additionally, most people would not bother to enter someone else’s information into a rate quote tool to see if they might be getting higher quotes. “Secretly, they are overcharging soldiers when they come back from deployment and nobody has any idea about it. And the soldier thinks, ‘well this is the best rate I’m going to get. I saw the ad, they support vets. It must be a good deal,’” Heller said.

Because Geico specifically asks a question about deployment on its tool, the changes are obvious. But Heller said this practice happens with other companies too. “They don’t need to impose these penalties on soldiers. They do it because they can get away with it. And for them, those extra dollars are worth more than whatever patriotism these soldiers have shown,” Heller said.

In Louisiana, the Bayou Brief reported on this issue looking at multiple insurance companies. It found the same results with Geico and also found some other companies charging more for anyone with lapsed coverage. One company, AllState, asked applicants to call an agent once they entered that their coverage lapsed for deployment.

Veteran calls for companies, laws to change

Mickey Carroll, the veteran and Louisiana VFW commander, said he wants to see companies change their policies.

“Do the right thing. Change the way you do business. Recognize what these young people are giving up so you can do business that you do,” Carroll said.

To ensure changes, Carroll said he would also like to see more laws passed.

“The laws need to be changed to simply state that if you are on deployment there will be no increase of any kind in your insurance premiums. As simple as that,” he said.

Because the choice to leave was not theirs, he said the insurance companies should not have a choice to charge more.

“They were ordered to leave the country… to go do their duty. It doesn’t make any sense. It’s the insurance company taking advantage of a situation to increase their premiums and their profit,” Carroll said.

InvestigateTV News Content Specialists Emma Ruby and Tess Rowland contributed to this report.

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