The Government Employees Insurance Company, the largest insurer of automobiles in the District of Columbia, can continue charging 6.9 percent more for its premiums pending an upcoming hearing, the D.C. Court of Appeals ruled yesterday.

A three-judge panel put aside--at least temporarily -- an order by the D.C. Department of Insurance that Geico reduce a rate increase that went into effect Sept. 6. Acting Insurance Superintendent James R. Montgomery had found the request for a $24 average increase to be "excessive," and ordered Geico to reduce it by half.

The judges said a full hearing on the rate increase will be held in late December or early January. If the court finds the higher rates to be unwarranted, Geico will then have to refund the excess payments to its customers with 8 percent interest.

Geico, a Bethesda-based firm which has 35,156 policyholders in the District, announced its rate increase on Sept. 6, 12 days before a new city rule went into effect requiring advance permission for rate increases. For a D.C. resident covered by Geico, the average cost of insuring a car for comprehensive, collision and property damage liability rose to $370, from $346, an increase of 6.9 percent.

Charles Reischel, the attorney from the D.C. Corporation Counsel's office who handled the case, said the city would continue to fight for a lower increase of 3.1 percent. D.C. officials say that increase would add $10.72 to an average annual premium. Geico says the city order would result in a $7.25 increase.

"It's important to protect the consumers," Reischel said. "They haven't shown why (their rates) are reasonable."

The city had argued that the insurance firm had changed its rating formula without sufficient justification and had failed to give enough weight to its investment income.

Tony Nicely, Geico's regional vice-president, said both of the city's contentions were "invalid."

"We pride ourself on being the low-cost operator," he said. "Our rates have increased less than 17 percent since May, 1977, a time when the consumer price index has gone up 61 percent."

The higher rates are necessary, Nicely said, because of an increased number of accident and theft claims. As a result, the firm used a different mathematical standard--one that showed more losses than the standard used in past filings.

"We felt all along that we had justified the rate increase," he added. "We were shocked and dismayed when we received the order from the superintendent. I just don't know what his motive was."

Geico's last increase was a 4.2 percent rise, in December, 1981.