Esurance Property and Casualty Insurance Company is on the receiving end of a proposed class action over its alleged practice of failing to include sales tax in loss payments for insureds’ damaged or stolen vehicles.
The lawsuit claims Esurance’s exclusion of sales tax from payments remitted to policyholders violates the terms of the company’s insurance policies.
According to the case, Esurance promises in its standardized policies to pay for “direct and accidental ‘loss’” to a covered vehicle, specifying that in the event of a loss, the insurer “may pay for a ‘loss’ in money or repair or replace the damaged or stolen property.” Moreover, the defendant promises that if the insurer pays for a loss in money, the payment “will include the applicable sales tax for the damaged or stolen property,” the suit relays.
The plaintiff, a Missouri citizen whose 2002 Toyota RAV4 was insured under an Esurance policy, says she filed a claim for property damage after her vehicle sustained loss or damage on March 30, 2016. Per the case, Esurance determined that the plaintiff’s car was a total loss and deduced an adjusted vehicle value of $5,788.00. The lawsuit says CCC, a third-party vendor Esurance uses to calculate the base and adjusted vehicle values for insurance claims, tallied that the sales tax on the plaintiff’s vehicle amounted to $411.70.
Esurance, however, removed the sales tax before making a payment to the plaintiff and instead paid the vehicle’s adjusted value plus $14.00 in fees and minus the plaintiff’s $500.00 deductible for a total payment of $5,302.00, the lawsuit says. According to the case, Esurance breached its contract with the plaintiff by failing to include sales tax in her property damage payment.
“Nothing in the Policy unambiguously excludes sales tax or contradicts Defendant’s promise to pay sales tax where it pays for the loss in money,” the complaint states, alleging Esurance has similarly excluded sales tax from payments made to “thousands” of other Missouri insureds.
The lawsuit, which was recently removed from St. Louis County Circuit Court to the Missouri’s Eastern District Court, looks to cover the following proposed class:
“All Missouri insureds, under a policy issued by Esurance covering a vehicle with private-passenger auto physical damage coverage for comprehensive or collision loss, who, within the applicable statute of limitations prior to the filing of this lawsuit through the date of the certification Order, submitted a first-party property damage claim determined by Esurance to constitute a covered loss claim and where the loss claim payment did not include sales tax.”
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