Geico Skimps on Vehicle Total Loss Payments by Omitting Tax and Fees, Class Action Says

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Geico Indemnity Company is the defendant in a proposed class action lawsuit in which a woman claims the insurance agency withheld part of the “actual cash value” (ACV) of her vehicle when paying out her total loss claim. The lawsuit alleges that Geico, as a matter of policy, fails to include sales tax, title transfer fees, and vehicle registration fees as part of a vehicle’s ACV when paying an insured for the value of a car declared to be a total loss after an accident.

The plaintiff, whose car was insured under one of the defendant’s policies, says she submitted a property damage claim to Geico after a car accident. After declaring the woman’s vehicle a total loss, Geico assessed the value of the car using a third-party report that determines a car’s value based on the cost of purchasing a similar vehicle with similar conditions and mileage, the suit says. Importantly, the lawsuit notes, the valuation report stated that “the total may not represent the total of the settlement as other factors (e.g. license and fees) may need to be taken into account.”

Though the report included tax in its total, Geico, the case says, subtracted this amount, as well as the cost of a title transfer and registration fees, from the final payment made to the plaintiff for her car. The lawsuit argues that tax and fees are part of a vehicle’s ACV, which is defined as “the repair or replacement cost minus depreciation,” and should have been covered by Geico’s payment in accordance with its insurance policy.