GEICO will pay $19.1 million as part of a settlement agreement to resolve accusations that it failed to pay sales tax for total loss auto claims made in California.
A vehicle may be declared a total loss if the damage it sustained exceeds the value of a car. In such cases, GEICO may pay policyholders a total loss claim for the actual value of the vehicle. But plaintiffs had argued that the insurer failed to include sales tax and regulatory fees in these payments. GEICO refuted these claims but agreed to a settlement.
The settlement benefits class members who were insured by GEICO and its subsidiaries and failed to receive claim payouts for either sales tax or regulatory fees. Specifically, those who submitted claims on June 27, 2015 (GEICO General), Oct. 23, 2016 (GEICO Indemnity), or June 30, 2017 (GEICO Casualty or Government Employees Insurance Company), through August 27, 2020, are eligible for the payment, Top Class Actions reported.
Read more: GEICO agrees to class action lawsuit settlement
It was noted that GEICO agreed to a similar settlement with Florida policyholders in July.
Read more: Progressive faces lawsuit for allegedly undervaluing totaled cars
A similar lawsuit was also filed against a Progressive Insurance subsidiary in March. A plaintiff argued that the insurer used inaccurate vehicle valuation reports provided by Mitchell International to underpay customers for total loss claims.