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GEICO faces class action lawsuit over unpaid title and transfer fees

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Insurance | Legal
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A U.S. District Court has granted class certification to a New Jersey woman who filed a complaint against GEICO for allegedly failing to pay the title and transfer fees for her total loss vehicle.

Diane McCoy filed a class action complaint against the company in 2020, detailing how she was involved in a total loss vehicle collision in January 2018 while insured by GEICO.

According to the lawsuit, GEICO, through a third-party vehicle valuation provider, determined the vehicle had a base value of $3,777 and an adjusted value of $3,838. The insurer added $254.27 for sales tax and subtracted $500 for the deductible for a total payout of $3,592.27, the complaint said.

However, it did not cover the cost of title transfer and tag fee transfers, the legal filing said.

“GEICO Indemnity’s failure to pay title transfer and tag transfer fees at the time of the loss breached the policy because these fees are necessary ‘replacement costs’ and are not attributable to depreciation nor betterment and constitute elements of the ACV of the insured vehicle,” the complaint said.

“McCoy paid all premiums owed and otherwise satisfied all conditions precedent such that her insurance policy was in effect and operational at the time of the accident. “Plaintiff and all members of the Class … were owed title transfer fees in the amount of $85.00 and tag transfer fees in the amount of $4.50.”

The plaintiff’s claim cited a federal civil procedure rule that says, in part, that a company can be sued for not paying the costs of title transfer fees or registration transfer fees in the event a policyholder has a total loss claim.

GEICO retorted that the case lacked standing as McCoy “suffered no concrete injury because any additional amounts included in her total loss settlement would have been paid to her lienholder.”

McCoy responded to that claim by saying she suffered a financial detriment as a result of being underpaid for her loss, according to a separate legal filing.

In a judgment allowing McCoy to proceed with her case, the presiding judge wrote that “by Defendant’s own admission, its general practice was not to pay Transfer Fees on such claims prior to January 1, 2020.”

“Even if all of the claims that occurred after Defendant changed its business practice in January 2020 were afforded Transfer Fees, the class members that did not receive these fees still comfortably exceed the 40 minimum required by the Third Circuit,” District Judge Zahid Quraishi wrote. “Accordingly, numerosity is satisfied.”

GEICO did not respond to a Repairer Driven News request for comment by deadline.

Last October, GEICO agreed to pay over $19 million to nearly 227,000 policyholders to settle allegations that it did not pay them the full amount owed in total loss claims.

The federal class action lawsuit was filed in 2019 and combined last year with a second suit filed in 2020. The combined complaint alleges that GEICO breached private auto insurance policies by improperly calculating or failing to include sales tax for the purpose of buying a replacement vehicle in total loss claims. Some plaintiffs also alleged GEICO didn’t pay local and state regulatory fees. At least one plaintiff claims his sales tax wasn’t paid because his vehicle was leased rather than owned, which the suit says goes against policy terms.

The settlement class is split into two types of plaintiffs — those owed sales tax and those owed regulatory fees. Class members include GEICO private passenger auto physical damage insurance policyholders whose claims were adjusted under Section III (comprehensive or collision coverage) of the carrier’s policy during the class period for which GEICO paid total loss claims and the policyholders didn’t keep the salvaged vehicles. The class period is from June 27, 2015 if insured by GEICO General, Oct. 23, 2016 if insured by GEICO Indemnity, or June 30, 2017 if insured by GEICO Casualty or Government Employees Insurance Company through Aug. 27, 2020.

The majority of the class members include those who are allegedly owed regulatory fees. The preliminary settlement agreement was approved in July. A hearing on the final settlement terms is scheduled for Dec. 15. In the meantime, claim forms to be included as a class member are due by Nov. 11. Policyholders who want to be excluded from the class must do so by Oct. 27, 2022. Claim forms and information on the class exclusion process are available here.

The preliminary agreement estimates the average sales tax class claim will be $2,051.98, which is based on an average vehicle value of $23,318.00 and a 7.25% average sales tax rate plus local sales tax. Each of the more than 218,000 regulatory fees class members are expected to receive $6.88 — representing one-half of an average monthly payment in regulatory fees, according to court documents. Twenty-five to 30% of sales tax and 20-25% of regulatory fees class members are expected to claim their settlements.


Featured image credit: jetcityimage/iStock

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