USAA Hit with Class Action Over Alleged Treatment of Officers Versus Enlisted Military Personnel
Coleman et al. v. United Services Automobile Association et al.
Filed: February 4, 2021 ◆§ 3:21-cv-00217
A class action claims USAA provides unlawfully disparate treatment to military officers and lower-ranked enlisted personnel who hold auto insurance policies.
Current and former military officers receive markedly better treatment from United Services Automobile Association (USAA) and USAA General Indemnity Company (USAA-GIC) than current and former enlisted personnel, a proposed class action alleges.
According to the 39-page lawsuit, USAA has violated the rights of current and former enlisted personnel—those on active duty in pay grades E-1 through E-6 and veterans whose highest rank was within those pay grades—with respect to policy prices and good-driver discounts, purported consideration of military status in setting premium rates and by consigning them to its “substandard” affiliate, USAA-GIC.
The complaint, filed by two United States Marine Corps and Army veterans, alleges USAA and USAA-GIC have violated California consumer protection laws, the state’s Insurance Code and the Unruh Civil Rights Act.
As the case tells it, USAA, while it holds itself out as a single entity, does not disclose to policyholders that they may be placed with USAA-GIC based on their military status.
Per the suit, the defendants charge enlisted policyholders with collision coverage and who qualify as good drivers under California law more for car insurance than they charge officers with the same coverage who qualify as good drivers, an apparent violation of the state’s Insurance Code. While the defendants provide the 20-percent discount mandated by California law, enlisted personnel, insured by USAA-GIC, pay higher base rates than officers insured by USAA, the case claims. From the suit:
“The California Department of Insurance (‘CDI’) never approved USAA-GIC’s conduct of failing to offer and sell to Enlisted Policyholders with collision coverage who are statutory good drivers a good driver discount policy from the insurer under common control with it that offers such policyholders the lowest rates for good driver coverage.”
According to the lawsuit, the pertinent section of the California Insurance Code provides that an insurer within a commonly controlled group of insurance companies shall sell a good driver discount policy that offers the lowest rates for that coverage. The defendants’ failure to offer enlisted personnel with collision coverage who qualify as good drivers under California law the “least expensive good driver discount policy” amounts to a violation of the state’s insurance code, the suit claims.
Further, the lawsuit alleges USAA “deceives” enlisted policyholders by omitting military status from what the insurer claims to be the complete list of information it says it considers in setting auto insurance premiums.
“Notably, military status as officer or enlisted—information USAA does not disclose—can have a greater effect on the premium a USAA insured pays than does much of the information USAA does disclose,” the complaint reads.
Third, the lawsuit alleges USAA “discriminates” against enlisted policyholders by “consigning” them to USAA-GIC, who’s described in the complaint as a “substandard insurance company” that charges “higher base rates for automobile insurance” than USAA.
“United Services offers insurance to current and former military officers, but not to Enlisted Policyholders,” the case charges.
The lawsuit looks to represent all enlisted persons in pay grades E-1 through E-6 who are citizens of California and who, at any time during the applicable statute of limitations periods, had collision coverage from USAA General Indemnity Company. The suit also proposes to cover a subclass comprised of all enlisted persons in pay grades E-1 through E-6 who are citizens of California and had collisions coverage from USAA-GIC and who qualified as good drivers under the California Insurance Code and were not offered a good driver discount policy from USAA.
In an email Friday, a USAA representative told Law360 that the company is “evaluating our legal options,” the publication wrote.
“However, we are confident there is no misconduct by USAA and look forward to defending our position,” the USAA rep said.
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