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If you’ve ever been in a car accident, you know the importance of insurance — especially if your vehicle was determined to be a total loss as a result of the crash. But what if the insurance company won’t pay out all the costs of the vehicle’s actual cash value as promised under your total loss insurance policy?
Allegedly, this is what happened to Ohio resident Sharon M., who claims that her insurance company failed to pay the sales tax, title transfer fees, and registration fees she was entitled at the time of loss, as per her policy. As a result, she filed a Liberty Mutual total loss class action lawsuit on behalf of herself and others who may also have incurred damages due to what she purports in the suit is the insurer’s “common scheme.”
In August, Sharon filed a Liberty Mutual total loss class action lawsuit against the Massachusetts-based insurance company in the U.S. District Court for the Southern District of Ohio, Western Division. In her suit, Sharon claims that she had a private passenger automobile (PPA) insurance policy, which didn’t contain any provisions requiring those who are insured to pay sales tax, title transfer fees, or registration fees before Liberty Mutual would pay the actual cost of the totaled vehicle.
Liberty Mutual Total Loss Class Action Lawsuit: Insurer Breached Contract
Sharon’s complaint states that Liberty Mutual breached its contract with her and all of its customers. “Substantively identical” policies were issued to all who were insured, affecting more than 20,000 people, she claims.
Sharon contends that tax, title transfer fees, and registration fees are “a mandatory cost of every PPA vehicle” insured by Liberty Mutual. Specifically, Sharon says that Liberty Mutual’s policy uses standardized language that “promises” the vehicle’s actual cash value will be paid in the event an accident results in a total loss.
Although she was paid the amount that Liberty Mutual determined to be the actual cash value of her vehicle after a total loss collision in May 2020, Sharon purports that the insurer failed to include in the payout the 5.75% state sales tax, 1% local tax, $15 title-on- transfer fee, and the $4.50 registration fee. She argues that these fees are imposed under Ohio law and should have been included in the vehicle’s actual cash value under the insurance policy.
“By representing that it will pay Actual Cash Value in the event of a total loss, Defendant, through the Liberty Mutual Policy, promises to pay these mandatory vehicle replacement costs as part of its coverage,” the Liberty Mutual total loss class action lawsuit states.
The lawsuit requests that the proposed class be certified by the court and that class members be awarded damages incurred as a result of the alleged breach of contract. The suit also asks for litigation and attorneys’ fees and interest.
Litigation in the case is ongoing. An amended complaint was filed in October and an additional lead plaintiff has joined the suit.
How is Total Loss Calculated in Ohio?
In Ohio, a vehicle is considered a total loss when it would cost more money for the insurance company to make repairs than to replace it. To determine whether a car is a total loss in Ohio, an insurance company bases everything on the car’s actual cash value at the moment before the accident took place — any dents, rust, and previous damage that the vehicle incurred before the collision are all factors in assessing the value.
Typically, an insurance company will determine a vehicle’s actual cash value based on how much comparable vehicles are worth or by getting quotes from local dealers. It may also use a pricing service that provides data about car prices in your area.
Each state uses different calculations to determine how much will be paid for a totaled vehicle, ranging from 50% of the vehicle’s actual value before the accident to 100%. Twenty-two states, including Ohio, follow the Total Loss Formula.
The Liberty Mutual Total Loss Class Action Lawsuit is Sharon Middleton, et al. v. Liberty Mutual Personal Insurance Company, Case No. 1:20-cv-00668-DRC, in the U.S. District Court for the Western Division of the Southern District of Ohio.
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