Avoid lending to GEICO customers
Raleigh, NC. – Our offices nationwide are noticing a disturbing trend dealing with customer loaner car accidents. The cases involve a dealer loaner vehicle being damaged and the customer who borrowed the vehicle is insured with Geico. In every single case the customer has signed a contract agreeing to be responsible for the damage to the “borrowed” car and have been at fault for subsequent damage. We recommend either completely avoiding lending an auto to those customers or at the very least confirming the customer carries comprehensive and collision on the Geico policy. Essentially Geico is claiming they are secondary in the loss and are forcing dealers to utilize their own physical damage policies first and Geico awaits the subrogation demands (months and sometimes years later) and at best they are offering to pay only 50% of the loss.
In one case, an Illinois customer who borrowed a vehicle caused a total loss to a $28,000+ new car loaner and Geico refused to pay the claim even though the customer signed a contract saying they are responsible. After the vehicle was sold at salvage Geico only offered to pay half of the $22,000 balance. This leaves the dealerships carrier “holding the bag” for the $10,000 they paid. This also left the dealer holding the bag for the $1,000 deductible which was not reimbursed. The “insult to injury” comes at insurance renewal time when the dealership realizes an increase in the cost of their inventory insurance due to claims like these.
In another case in North Carolina, Geico again refused to pay on a $18,000 total loss leaving the dealership “holding the bag” on a $2,500 deductible.
Regardless of what carrier your customers have when borrowing a loaner car it is a good idea to confirm:
1) They carry comprehensive and collision coverage, if they do not carry this coverage they do not get a loaner!
2) They sign a strong loaner car agreement tying them to the liability.
3) They understand that they can and likely will be personally sued if their insurance carrier does not make the dealer whole.
Things only get worse when bodily injury is involved. Our team is thus recommending to our clients that you avoid loaning to customers of Geico. We are also actively assisting in lawsuits in which the dealership is suing the customer for failure to pay for the loss to the loaner vehicles. For more information, sample loaner car agreements or advice on dealing with these types of issues please contact our office at 888-802-3441 ext 701 or via email at firstname.lastname@example.org.