USAA settles $39 million class action

Up to 70,000 in line to receive payments

USAA settles $39 million class action

Insurance News

By Allie Sanchez

Military insurer USAA has agreed to settle a $39 million class action suit because it has “considered the risks associated with this complex prosecution and time-consuming litigation” which involves 70,000 complainants.

The suit was filed in 2013 to challenge a company practice which did not include the actual cash value (ACV) sales tax for the ACV payments it made to first party insurance claims for private passenger automobiles.

ACV is the nominal equivalent of the damaged vehicle to compensate for associated losses.

According to court documents, USAA made the settlement without admitting to any wrong doing.

San Antonio Business Journal reported that USAA does not as a rule pay the ACV sales tax outright with the purchase of a replacement vehicle, but rather reimburses it, in accordance with company policy.

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Lawyers for the plaintiffs alleged that the insurer did not reimburse the tax paid by its members, which amounts to 6% of the property in question in Florida.

“We settled because litigation is inherently unpredictable, extremely expensive and disruptive of USAA’s day-to-day operations,” said Roger Wildermuth, spokesman for USAA in an email to the publication.

The company also maintains that its policies are compliant with state law.

“We follow the laws of each state. We believe that we properly followed the Florida statute and paid members sales tax when they notified USAA they had replaced their vehicles,” Wildermuth said in the report.

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