Does USAA Offer Total Loss Protection for Ohio Drivers?

USAA offers total loss protection, although a class action against the company argues that their total loss insurance policies do not adequately reimburse consumers.

What is Total Loss Protection?

Total loss protection, also called gap insurance, provides coverage for Ohio drivers who may end up with an outstanding balance on their loan if their vehicle is declared a total loss after a car accident.

A total loss settlement compensates a policyholder if their vehicle is damaged to the point that repairs would exceed the vehicle’s value. These settlements typically provide a lump sum of the vehicle’s actual cash value. Unfortunately, a vehicle’s value may not be enough to cover the remaining balance on an auto loan. In these cases, consumers may complain or sue the insurance company.

Although gap protection is associated with increased premiums, some Ohio drivers may determine that the peace of mind of having a remaining balance covered is worth the additional costs.

Does USAA Offer Total Loss Protection?

USAA does offer total loss protection which serves as gap insurance. The protection will cover the difference between the total loss value of the vehicle and the remaining balance left on a vehicle’s loan. The program also offers an additional $1,000 of the insurance deductible.

USAA total loss coverage is only offered for vehicles that are less than seven years old and for auto loans over $5,000. Consumers are reportedly charged a flat fee of $269 for the coverage.

Although USAA policies claim to reimburse consumers for the total cost of replacing their totaled vehicle, some consumers who have submitted claims to the insurance company say that these policies may be misleading.

According to some consumers, while USAA and other insurance companies do cover the price of a new vehicle, these policies do not factor in the cost of associated fees and taxes. As several fees and taxes are legally required to be paid on new vehicles that are purchased, some consumers believe that the insurance companies should be factoring these costs into their settlement amounts, rather than passing these expenses on to consumers.

Title transfer fees are required to be paid when consumers purchase a new vehicle, and the cost to transfer a title may be close to $100. Additionally, taxes on new vehicle purchases may be up to thousands of dollars. These taxes and fees can quickly add up, leaving consumers who believed that their insurance would cover the cost of replacing their vehicle with an unexpected and unpleasant bill.

While some states, including California, Illinois, Kansas, New York, and Pennsylvania have laws specifically requiring insurance companies to pay for applicable taxes or fees on total loss vehicle claims, other states allow insurers to set the terms of their own policies.

Has USAA Been Sued Over Their Total Loss Policies?

Several consumers who believe that USAA or other insurance companies have failed to follow their own policies and pay the full cost of replacing a totaled vehicle have filed lawsuits against their insurers. According to them, the cost of taxes and fees is part of a vehicle’s value, and should be covered by their total loss protection insurance.

Plaintiff Malaika Coleman alleges that USAA failed to properly reimburse her and other consumers with total loss settlements.

Coleman was reportedly involved in an accident in September 2018 which totaled her 2006 Chrysler 300. After filing a claim with USAA, Coleman was reportedly offered a $3,466 total loss settlement which the insurer allegedly portrayed as the “actual cash value” of her totaled vehicle.

According to the USAA class action lawsuit, this settlement did not fairly compensate Coleman for her vehicle. A third party reportedly determined Coleman’s vehicle to be worth $3,594.15, including $334.15 for taxes.

Coleman argues that she and other consumers were only paid the “adjusted value” of their vehicle and a $25 license/tag transfer fee. USAA allegedly failed to pay the sales tax on vehicles which Coleman argues is “an inextricable part of a vehicle purchase.”

“Defendants failed to pay the costs of sales tax even though the Market Valuation Report determined that sales tax is a required sum to buy a comparable vehicle,” the USAA class action lawsuit alleges.

“Defendants breached their contract with Plaintiff by not including the cost of sales tax in making the Actual Cash Value payment for Plaintiff’s total loss.”

Coleman claims that this practice likely extended to other USAA customers. In her USAA class action, Coleman seeks to represent a Class of people who had a USAA auto policy in Illinois, who made a claim which was a total loss within the last 10 years, and who were not paid their full total loss vehicle value sales tax.

Although USAA successfully had Coleman’s initial complaint dismissed in July 2019, Coleman returned with her amended complaint in August.

The USAA Total Loss Class Action Lawsuit is Coleman v. Garrison Property and Casualty Insurance Co., et al., Case No. 1:19-cv-01745, in the U.S. District Court for the Northern District of Illinois.

Join a Free Total Loss Car Accident Class Action Lawsuit Investigation

If you were insured under an auto insurance policy, experienced a total loss car accident, and were not reimbursed for sales tax and other fees by your insurance company in the last 5 years, you may qualify to join a total loss car accident class action lawsuit investigation.

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