USAA to File Mississippi Class Action for Overpaid Claims

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An insurance company in the country has agreed to settle the case that it paid too much for car insurance.

A Mississippi federal court this month signed a confidential ruling on a lawsuit brought by Mississippi drivers against the San Antonio-based United Services Automobile Association (USAA). The terms of the settlement were not disclosed. The agreement came just days after US District Judge Sharion Aycock refused to dismiss the case.

It is unlikely that any class member will receive more than a few hundred dollars in settlement. The plaintiffs allege that USAA failed to pay the actual cost of the vehicle involved in the accident, pursuant to the plain and collision statutes. But in most complaints, the payment may have left only licenses and registrations, taxes and dealer fees, the amended complaint reads.

“All together, the average car costs about $571.00 in license fees,” he complained.

The suit said the Mississippi Department of Insurance in 2007 issued a notice informing insurers that for a total loss, carriers must include fines, taxes, and title fees in their insurance payments.

USAA, which insures soldiers, their families and professionals, argued in court last year that the plaintiffs misinterpreted the language and did not understand “reduction of duty as a promise to pay.”

“Nowhere in the policy does USAA promise to pay taxes and business expenses in the event of a total loss,” USAA said in a brief. Also USAA was not obligated to pay ‘ACV.’ Plaintiff confuses her policy of insurance—which defines USAA’s liability to pay for a loss—with the policy’s limit of liability—which is the limit, or maximum, that USAA will pay for a given loss.”

The lawsuit is one of several to take place across the country alleging that insurers pay less for one-way claims.

GEICO in May was hit with a similar class-action suit in Georgia, accused of undercutting taxes in all auto damages, according to news reports.

The state’s insurance chief last spring made a similar statement and ordered auto insurers to stop calculating tax credits for all vehicles. Some carriers were paying the actual value of the vehicle but subject to sales tax, and insurance liability, at a lower rate, calculated from the sales and value of the vehicle.

State Farm Insurance in July settled an Alabama lawsuit that said it understated the cost of home improvement work, which is not allowed under Alabama law. Depreciation often brings the premiums below the deductible, leaving insurers with no refunds, the lawsuit alleges.

In March, lawmakers in Illinois filed a lawsuit against State Farm Automobile Insurance, alleging that the insurer used a “negotiated temporary adjustment” to improperly reduce the value of an apparently lost vehicle.

Some suits are still pending, but others have not been successful. USAA’s lawsuit in Mississippi says that in two lawsuits brought by the same plaintiffs’ attorneys, a federal appeals court ruled in favor of the insurance company. US 7Th The Illinois Supreme Court of Appeals in 2021 upheld the dismissal of a tax-deficiency complaint because the plaintiff was wrong that the ceiling should be lower, USAA said.

USAA officials were not immediately available for comment on the Mississippi team’s actions. Three of the attorneys in the case live in Florida.

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