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Florida-based insurance class action lawsuit settles for $39M

Mon May 1st, 2017 on     Insurance Claims,    

Anyone who has ever been involved in what proves to be a relatively minor car accident knows that one of the biggest headaches from the entire ordeal comes from the damage to their vehicle.

Indeed, the headache rapidly reaches migraine proportions if their vehicle, which was otherwise in good working order, was totaled, such that they’re left looking for a new means of suitable transportation. 

As painful as this can be, parties can take some comfort from the fact that they will receive a check from their insurer for the value of their totaled car, truck or SUV. While it might not be enough to cover the cost of a replacement, it will certainly help offset some of the cost.

Interestingly enough, the reimbursement practices of one major auto insurer here in the Sunshine State were recently at the center of a class action lawsuit that settled last week for $39 million.

What exactly was this lawsuit about?

The class action lawsuit in question was filed back in 2013 against USAA on behalf of roughly 70,000 affected customers whose policies were underwritten between October 2008 and October 2016.

Specifically, it challenged the reimbursement policies of the insurer, which involve paying customers for the value of their totaled vehicle upfront plus the sales tax for a replacement vehicle once post-purchase notification was provided

The class action alleged that as many as 70 percent of the aforementioned customers never received the full sales tax they were owed, which is a minimum of 6 percent in Florida.

What were the settlement terms?

Reports indicate that San Antonio-based USAA agreed to set aside $34 million for these roughly 70,000 affected customers, such that the majority will end up receiving not just 100 percent of their respective claims but also 8 percent interest.

In addition, USAA agreed to redraft its Florida policy, such that policyholders will be paid both the initial claim payment and the sales tax amount upfront.

Was there any admission of liability?

For its part, USAA did not admit to any malfeasance in the settlement, indicating that all of its policies were compliant with Florida law and that settling the matter was simply in its best business interests. Similarly, it indicated that its decision to alter tactics concerning the reimbursement of sales tax fees going forward was not done out of any legal obligation.

What cases like these serve to demonstrate is that policyholders do not need to feel as if they are powerless against insurance companies and that they do have options for seeking justice.

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