USAA settles Mississippi class action over unpaid auto claims

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Another national insurance company has agreed to settle a class-action lawsuit that claims it underpaid hundreds of auto insurance claims.

A federal court in Mississippi this month upheld a confidentiality agreement in a lawsuit filed by Mississippi drivers against the San Antonio-based United Service Automobile Association (USAA). Terms of the deal were not disclosed. The settlement came just days after US District Judge Sharion Aycock refused to dismiss the lawsuit.

It is unlikely that any class member will receive more than a few hundred dollars in settlement. The plaintiffs have said that USAA failed to pay the actual cash value of the totaled vehicles as required by the comprehensive and collision policies. But in most claims, the payments may have left out only license and registration fees, taxes and dealer fees, the amended complaint said.

“Taken together, the average vehicle incurs approximately $571.00 in license fees,” the complaint noted.

The lawsuit said the Mississippi Department of Insurance in 2007 issued a bulletin notifying insurers that in total losses, carriers must include license fees, taxes and title fees in their payments to policyholders.

USAA, which insures members of the military, their families and veterans, argued in court filings last year that the plaintiffs had misinterpreted the policy’s language and misconstrued “a limitation of liability as a promise to pay.”

“Nowhere in the policy does USAA promise to pay merchant taxes and fees in the event of a total loss,” a USAA summary said. Nor was USAA contractually obligated to pay ‘ACV’. Plaintiff confuses his policy’s insuring agreement—which sets forth USAA’s obligation to pay for the loss—with the policy’s limit of liability—which is the limit, or most, that USAA will pay for a given loss. .

The lawsuit is one of several class actions or regulatory actions across the country that allege insurers have underpaid property claims by one method or another.

GEICO in May was hit with a similar lawsuit in Georgia, accusing it of understating taxes on total vehicle losses, according to news reports.

The state’s insurance commissioner last spring raised the same issue and directed auto insurers to stop undercounting tax amounts on totaled vehicles. Some carriers paid the actual value of the vehicle, but based the sales tax, which was also owed to the insurer, on a lower value calculated from a combination of retail and wholesale prices.

State Farm Insurance in July settled an Alabama lawsuit alleging it understated the cost of labor for home repairs, which is not allowed under Alabama law. The depreciation in many cases brought the payout below the policy’s deductible, leaving policyholders without recovery, the lawsuit alleges.

In March, policyholders in Illinois filed a class action lawsuit against State Farm Automobile Insurance, charging that the insurer applied a “typical negotiation arrangement” to improperly reduce the value of a car deemed a total loss.

Some of the lawsuits are still pending, but others have not been successful. USAA’s court filing in the Mississippi lawsuit notes that in two cases brought by attorneys for the same plaintiffs, a federal appeals court ruled in favor of the insurer. USA 7th The Illinois District Court of Appeals in 2021 upheld the dismissal of missing sales tax claims because the plaintiff had mistaken a liability ceiling for a floor, USAA said.

USAA officials could not be reached for comment on the Mississippi group’s action. Three of the attorneys in the case are based in Florida.

Lawsuit Auto Claims Mississippi

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