This is one of those bad news/good news items. The bad news is that Washington's largest automobile insurer has raised its rates for District of Columbia policyholders. The goodnews is that the increase lags well below the 10-percent-plus rate of inflation in the overall economy.

The Government Employees Insurance Co. (Geico) put an overall average premium increase of 4.2 percent into effect Dec. 21, raising the average policyholder's costs from about $436 to about $450 a year. Announcement of Geico's rise was made in a notice by the D.C. Insurance Department published in the official D.C. Register over the weekend.

Geico insures about one of every five insured cars in the city, about equal to the next three largest insurers combined.

O. M. (Tony) Nicely, regional vice president of the Chevy Chase-based firm, said the increase was Geico's first for D.C. policyholders since November 1979, when premiums rose 8.9 percent. Rates went up in Virginia in 1980 by 5.8 percent and in Maryland in June by 8.8 percent.

Geico policies ordinarily are written for one-year terms. Policyholders will be assessed the higher charges when their existing policies are renewed.

Under D.C. law, the Geico increase went into effect when filed by the company, but is subject to rollback if the Insurance Department orders one. In its notice, the department invited public comments until Jan. 24.