Geico class action alleges insurer regularly underpays actual cash value claims

Geico actual cash value class action overview: 

• Who: A Geico insurance policyholder is suing the company. 
• Why: The plaintiff says the company underpays its customers for total loss vehicles.
• Where: The Geico actual cash value class action lawsuit was filed in a New York federal court. 

A new class action lawsuit alleges that Geico systematically underpaid thousands of policyholders on total loss claims. 

Plaintiff Renata Shiloah filed the class action complaint against Geico Indemnity Company on July 17 in a New York federal court alleging breach of contract. 

According to the lawsuit, Geico failed to include mandatory sales tax in the Actual Cash Value (ACV) payments for total loss vehicles.

“Upon information and belief, Geico systematically underpaid not just Plaintiff but thousands of other putative Class members under the Policy,” the lawsuit alleges. 

Breach of contract alleged

Shiloah, who had a Geico automobile policy for her 2017 Nissan Rogue Sport S, claims that Geico’s policy defines ACV as the replacement cost of the vehicle minus depreciation or betterment. 

She says that under New York law, sales tax is a necessary component of a vehicle’s replacement cost and should, therefore be included in the ACV.

The lawsuit states that Geico has a uniform procedure for calculating total loss vehicle values, using a third-party vendor to determine the base and adjusted value. However, the insurer allegedly does not pay any sales tax on many first-party total loss claims in New York and fails to pay the full applicable sales tax on others.

“Defendant… thereby breached its contracts with Plaintiff and other Class members,” the lawsuit states.

Sales tax paid out of pocket

The complaint details how Shiloah’s insured vehicle was deemed a total loss after an accident in 2018. She says Geico determined the base value of her vehicle to be $16,424 and settled the claim at $15,666, excluding any payment for sales tax. Shiloah alleges this exclusion breaches the insurance contract and violates New York insurance regulations. Those regulations require that insurers pay all amounts reasonably necessary to replace a total loss vehicle, including sales tax.

Shiloah says she replaced her totaled vehicle and incurred the sales tax out of pocket. The sales tax rate in Nassau County, New York, where she lives, is 8.625%.

Shiloah is looking to represent anyone insured under any Geico automobile policy in New York with similar policy language covering private passenger auto physical damage for comprehensive or collision loss. The proposed class includes those who made a first-party claim for total loss and were not paid the full applicable ACV sales tax in the past six years.

She is suing for breach of contract and is seeking certification of the class action, damages, fees, costs and a jury trial. 

Earlier this month, Geico agreed to pay nearly $2 million to settle a class action lawsuit that alleged the insurer failed to pay title or registration transfer fees for the total loss of insured vehicles.

Have you had a similar issue with Geico as this plaintiff? Let us know in the comments! 

The plaintiff is represented by Joseph N. Kravec Jr, Ruairi McDonnell and Kaitlyn M. Burns of Feinstein Doyle Payne & Kravec LLC. 

The Geico actual cash value class action lawsuit is Renata Shiloah v. Geico Indemnity Company, Case No. 6:24-cv-06447 in the U.S. District Court for the Western District of New York. 

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