Another national insurance company has agreed to settle a class-action lawsuit alleging it underpaid hundreds of auto insurance claims.
A federal court in Mississippi this month signed off on a confidential settlement in a suit brought by Mississippi drivers against San Antonio-based United Services Automobile Association (USAA). The terms of the settlement were not disclosed. The agreement came just days after U.S. District Judge Sharion Ayco*ck refused to dismiss the suit.
It’s unlikely that each class member will receive more than a few hundred dollars in the settlement. The plaintiffs have said that USAA failed to pay actual cash value for vehicles totaled in accidents, as required by 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 reads.
“Taken together, the average vehicle incurs approximately $571.00 in license fees,” the complaint noted.
The suit said that the Mississippi Department of Insurance in 2007 put out a bulletin notifying insurers that in total losses, carriers must include license fees, taxes, and title fees in their payouts to insureds.
USAA, which insures members of the military, their families and veterans, argued in court briefs last year that the plaintiffs had misinterpreted the policy language and had misconstrued “a limitation of liability as a promise to pay.”
“Nowhere in the policy does USAA promise to pay taxes and dealer fees in the event of a total loss,” a USAA brief said. “Nor was USAA contractually obligated to pay ‘ACV.’ Plaintiff confuses his policy’s insuring agreement—which defines USAA’s obligation to pay for loss—with the policy’s limit of liability—which is the limit, or most, that USAA will pay for a given loss.”
The suit is one of several class actions or regulatory actions around the country alleging insurers have underpaid property claims by one method or another.
GEICO in May was hit with a similar class-action suit in Georgia, accusing it of underestimating taxes in total vehicle losses, according to news reports.
The state insurance commissioner last spring had raised the same issue and directed auto insurers to stop under-calculating tax amounts for totaled vehicles. Some carriers were paying the actual value of the vehicle but basing the sales tax, 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 that charged it had depreciated the cost of labor on home repairs, which is not allowed by Alabama law. The depreciation in many cases brought the payout below the policies’ deductible amount, leaving insureds with no recovery, the suit alleged.
In March, policyholders in Illinois filed a class-action lawsuit against State Farm Automobile Insurance, charging that the insurer applied a “typical negotiation adjustment” to improperly reduce the value of a car deemed a total loss.
Some of the suits are still in litigation, but others have not been successful. USAA’s court filing in the Mississippi suit notes that in two cases brought by the same plaintiffs’ attorneys, a federal appeals court ruled in favor of the insurer. The U.S. 7th Circuit Court of Appeals in Illinois in 2021 upheld the dismissal of claims over missing sales tax because the plaintiff had mistaken a liability ceiling for a floor, USAA said.
USAA officials could not be reached for comment on the Mississippi class action. Three of attorneys in the case are based in Florida.
Topics Lawsuits Auto Claims Mississippi
FAQs
The complaint alleges violations of California's Insurance Code, Unfair Competition Law, and False Advertising Law. The DA's Bureau seeks civil penalties, restitution for California consumers, injunctive relief, and associated fees and costs. According to the complaint, USAA uses CCC and Progressive uses Mitchell.
Is USAA giving money back on car insurance? ›
In April 2020, USAA announced that it would be offering refunds and lower premiums to policyholders who were impacted by the pandemic. In the words of USAA's President and CEO Wayne Peaco*ck, “Giving money back to our members, especially now when budgets are stretched, is another way we are helping.
How good is USAA at paying claims? ›
Additionally, respondents also rated the company a 4.1-star rating for satisfaction with the claim outcome or settlement. In the J.D. Power 2022 U.S. Auto Claims Satisfaction Study℠, USAA even made fourth place in customer satisfaction for claims, with 890 out of 1,000 points.
What is the average settlement with USAA? ›
There is no way to determine an average settlement for an insurance claim with USAA insurance. That's because no two car crashes are the same. Instead, the injuries suffered and damages incurred differ, thus making it impossible to determine an average or use the outcome of one claim to predict the payout in another.
Should I cash a class action settlement check? ›
People have mixed feelings about class-action suits, and whether you cash class-action refund checks is up to you. Generally, if you get one, you probably paid a lot more in wrongful fees than you're getting back in the settlement. If you don't cash the check, the money may go back to the company.
What is the USAA bank controversy? ›
“As its customer base and revenue grew in recent years, USAA FSB willfully failed to ensure that its compliance program kept pace, resulting in millions of dollars in suspicious transactions flowing through the U.S. financial system without appropriate reporting,” FinCEN acting director Himamauli Das said at the time.
Does USAA raise rates after a claim? ›
We never raise rates to make up for past claims.
What are the disadvantages of USAA? ›
Disadvantages of USAA home insurance include limited extra coverage options and availability since the company only writes policies for homeowners with military affiliations.
How long does USAA take to settle a claim? ›
Many cases settle within a few weeks, but others take several months. If the case goes to trial, it could take a year or longer. Working with a traffic accident attorney is the best way to ensure that you get a fair payout based on your accident-related damages.
Does USAA pay for pain and suffering? ›
Before you file a personal injury claim, you must prove permanent injury from your case accident if you want USAA to pay your pain and suffering.
USAA will make a reasonable settlement offer before trial on most serious accident claims. This is especially true if the plaintiff's lawyer has a history of success at trial and if the case is at the point where the suit has been filed, discovery is complete, and the claims adjuster has thoroughly evaluated the case.
Will USAA drop me for too many claims? ›
How many claims can you file before an insurance company drops you? There is no limit on the amount of insurance claims you can file, but most experts say filing more than one claim per year could result in an insurance company canceling your policy. It's best to avoid filing multiple claims in one year.
What does CCC stand for in auto insurance? ›
Care, custody, or control (CCC) is an exclusion common to several forms of liability insurance, which eliminates coverage with respect to damage to property in the insured's care, custody, or control.
Does USAA pay pain and suffering? ›
Before you file a personal injury claim, you must prove permanent injury from your case accident if you want USAA to pay your pain and suffering.
What is class action settlement payment? ›
A class-action lawsuit settlement is the proceeds that are received from winning a class-action lawsuit. It is the monetary benefit paid out to the individuals that make up the class-action lawsuit.
Should I claim class action lawsuit? ›
And since class action cases may take years, even to obtain a court-approved settlement, “sometimes it's easier to settle an individual case than the entire case,” Feldman says. However, if an eligible member does not plan on filing an independent lawsuit, there's no obvious downside to being a member, he says.
USAA, which insures members of the military, their families and veterans, argued in court briefs last year that the plaintiffs had misinterpreted the policy language and had misconstrued “a limitation of liability as a promise to pay.”