Lawsuit Claims Liberty Mutual Excludes Taxes, Title, Registration Fees from Total Loss Payments
by Erin Shaak
Middleton v. Liberty Mutual Personal Insurance Company
Filed: August 26, 2020 ◆§ 1:20-cv-00668
A class action claims Liberty Mutual wrongfully failed to include tax, title, and registration fees in payments doled out for insureds’ total loss claims.
A proposed class action claims Liberty Mutual Personal Insurance Company has wrongfully failed to include tax, title, and registration fees in payments doled out for insureds’ total loss claims.
The lawsuit out of Ohio alleges that although Liberty Mutual has promised to pay the actual cash value (ACV) of an insured car deemed a total loss after a collision or other damage, the defendant has left out certain costs necessary to replace the vehicle—namely, state and local sales tax, title-transfer fees and registration fees.
According to the case, the plaintiff was insured under a standardized Liberty Mutual private passenger auto policy. Through the policy, the defendant promised to pay the woman’s vehicle’s ACV upon the occurrence of a total loss while imposing no requirement for the plaintiff to replace the car or pay sales tax, title-transfer or registration fees before entitlement to the full ACV payment, the lawsuit says, noting that such costs are “a mandatory part of the replacement cost” of every private passenger vehicle insured by Liberty Mutual in Ohio.
Per the suit, Ohio law imposes a mandatory state sales tax of 5.75 percent (plus up to a two-percent local tax), a minimum $15 title transfer fee, and minimum registration fees of $4.50 on each vehicle purchase or title and registration transfer. These required costs, therefore, are to be included as part of a vehicle’s ACV under the plaintiff’s Liberty Mutual policy, the case argues.
The plaintiff says she filed an insurance claim with Liberty Mutual following a May 7, 2020 auto collision, after which the defendant determined her vehicle was a total loss. Liberty Mutual’s third-party vehicle valuation provider, CCC Information Services, determined the plaintiff’s car had an adjusted vehicle value of $5,806.00, added a 6.75 percent tax of $391.91, and subtracted the plaintiff’s $500.00 deductible, arriving at a total value of $5,697.91, per the complaint.
Liberty Mutual, however, failed to include any amount for sales tax or title/registration fees in its final ACV determination, instead starting with the car’s $5,806.00 adjusted vehicle value, adding $788.00 in “Plus Better Car Replacement,” subtracting the $500 deductible, and making a final payment of $6,094.00 to the plaintiff, the case claims.
The complaint sums up the amounts allegedly owed to the plaintiff, stating:
“The ACV sales tax on Plaintiff’s claim was $391.91 because the applicable sales tax was 6.75% (5.75% state sales tax and 1% local sales tax) and the value of Plaintiff’s Insured Vehicle at the time was $5,806.00. The title-transfer fee on Plaintiff’s claim was $15.00 because Ohio mandates a minimum title-transfer fee of $15.00. The registration fee on Plaintiff’s claim was $4.50 because Ohio mandates a minimum registration fee of $4.50.”
According to the suit, Liberty Mutual has implemented “substantively identical” private passenger auto insurance policies for all insureds and thus breached its contracts with customers by failing to pay the actual cash value of totaled vehicles, a practice the case claims has been applied to all similarly situated Ohio policyholders.
“The aforementioned scheme—promising to provide the cost of replacement (minus depreciation) but declining to actually do so—is a common scheme implemented by Liberty Mutual in a uniform and identical manner towards all Ohio insureds throughout the relevant class time period,” the complaint alleges.
The suit’s filing marks the latest instance of an insurer—including Geico, AAA, State Farm and USAA—facing proposed class action litigation challenging their total loss claim valuation methods, with the Geico case having reached a settlement in January 2020.
The plaintiff looks to represent all Ohio residents insured by Liberty Mutual for private passenger auto physical damage who:
“(1) suffered a first-party total-loss of a covered vehicle during the eight years before this lawsuit through class certification;
(2) whose claims Defendant adjusted as total-loss claims;
(3) whose claims resulted in Defendant’s payment of a covered claim; and
(4) to whom Defendant failed to pay the full ACV sales tax, title transfer fees, or registration fees on their covered claims.”
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