USAA Faces Class Action Lawsuit in Arevalo vs USAA Case Over Total Loss Claims

Last updated Monday, July 8th, 2024

USAA Faces Class Action Lawsuit in Arevalo vs USAA Case Over Total Loss Claims

Arevalo vs USAA involves claims by Texas policyholders that USAA underpaid their total loss claims. This article outlines the core issues, allegations, and impacts on policyholders, as well as the lawsuit’s current status.

Key Takeaways

  • The Arevalo vs USAA class action lawsuit involves allegations that USAA underpaid Texas policyholders for total loss claims by using unreliable vehicle valuation methods and not covering various related fees and taxes.
  • A Georgia federal judge has granted preliminary approval for a settlement deal in the lawsuit, with a final approval hearing scheduled for December 13, where USAA was also ordered to pay nearly $573,000 in attorney’s fees.
  • The lawsuit raises broader concerns about USAA’s practices and trustworthiness, highlighting the impact on policyholders who may experience financial and emotional stress due to delayed or underpaid claims.

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Many Texas insureds have focused their attention on the class action lawsuit against USAA, which involves total loss claims. These individuals have found themselves at odds with the insurance giant over what they argue are unjust total loss claim payments. This case, known as Arevalo vs USAA, brings to light the grievances of policyholders who believe they were underpaid for their vehicle losses.

This lawsuit specifically pertains to Texas insureds whose physical damage claims led to total loss claim payments. This case is not just about numbers; it’s about the real impact on people’s lives and the trust they place in their insurance providers.

Background of Arevalo vs USAA Case

The Arevalo vs USAA case originated from physical damage claims lodged by Texas insureds, which subsequently led to total loss claim payments. These claims have brought to the forefront issues that many policyholders face when dealing with large insurance companies. The United Services Automobile Association (USAA) has long been a trusted name in the insurance industry, but this lawsuit challenges the company’s practices and policies.

Texas insureds, including the plaintiffs in this lawsuit, allege that USAA failed to adequately compensate them for their total loss claims. This contention has led to a broader discussion about the practices of the insurance company USAA and how it handles total loss valuations and payments.

Allegations Against USAA

The Arevalo vs USAA lawsuit contains serious and far-reaching allegations against USAA. Plaintiffs allege that the United Services Automobile Association breached its auto insurance policies by underpaying fees and taxes related to total loss claims. This includes underpayment of sales taxes and various fees such as title and dealer fees. According to the plaintiffs, these practices violate the terms of their insurance contracts and constitute bad faith on the part of the insurer.

A major point of contention is the methodology that USAA deploys to value totaled vehicles. Plaintiffs allege that USAA Casualty Insurance Company used valuation reports from CCC Intelligent Solutions, which they claim intentionally undervalued total loss claims. This method of valuation, the plaintiffs argue, resulted in lower compensation than what they would have received if USAA had used more reliable sources like the National Automobile Dealers Association (NADA) guidebook.

USAA, on the other hand, denies these allegations. The company asserts that it has complied with the terms of its policies, including USAA general indemnity, and applicable law, and denies any wrongdoing or bad faith in its handling of total loss claims. This dispute highlights the complex nature of auto insurance claims and the challenges policyholders face when attempting to receive fair compensation.

Total Loss Valuation Dispute

A car showroom in Texas.

At the heart of the Arevalo vs USAA lawsuit is a disagreement over USAA’s method of determining the actual cash value of totaled vehicles. The plaintiffs argue that the methods used by USAA are unreliable and result in the undervaluation of vehicles. This issue has significant financial implications for policyholders who depend on fair valuations to recover from their losses.

USAA is accused of not paying the correct amount for:

  • sales tax
  • title fees
  • regulatory fees
  • inspection fees
  • other fees associated with total loss claims

The plaintiffs contend that this underpayment is a breach of their automobile insurance policies. For example, in one case, USAA valued a policyholder’s car at $4,345 but issued a final payment of only $4,277 after deductions. The complaint stated that the sales tax on the car should have resulted in an additional payment.

The plaintiffs believe that had USAA used more reliable valuation methods, such as those provided by the NADA guidebook, they would have received higher compensation. This dispute underscores the importance of accurate and fair valuation methods in the insurance industry.

Court Proceedings and Developments

Significant developments have occurred in the district court regarding the Arevalo vs USAA lawsuit. Recently, a Georgia federal judge granted preliminary approval for a settlement deal in the class action lawsuit concerning the underpayment of taxes in total loss claims. This approval is a crucial step towards resolving the dispute and providing relief to the affected policyholders.

A final approval hearing for the lawsuit is scheduled for December 13, where the settlement is expected to be finalized. This hearing will be a pivotal moment for both the plaintiffs and USAA, as it will determine the final outcome of the case and the compensation to be awarded.

In addition to the settlement, USAA was ordered to pay nearly $573,000 in attorney’s fees related to the lawsuit. This substantial amount reflects the legal costs incurred by the plaintiffs in pursuing their claims against the insurer.

Settlement Efforts and Negotiations

USAA typically settles cases before reaching trial, frequently escalating their settlement offers as the court date draws nearer. This strategy is designed to avoid the uncertainties and costs associated with a courtroom battle. In the Arevalo vs USAA case, the settlement efforts have been substantial, with USAA preferring to negotiate rather than litigate.

As the trial date nears, USAA tends to offer higher settlement amounts. This approach not only expedites the resolution process but also provides more substantial compensation to the affected policyholders within the settlement class. The variability in settlement amounts often depends on the claims adjuster handling the case, which can lead to significant differences in the offers made. With USAA determined to reach a resolution, this strategy benefits both the company and the settlement class members.

USAA’s tendency to settle cases before trial is evident in its handling of the Arevalo vs USAA case. The company aims to resolve disputes through negotiation, ultimately benefiting both the insurer and the policyholders.

Impact on Policyholders

The ongoing lawsuit of Arevalo vs USAA carries substantial consequences for policyholders. Those who filed total loss claims may see adjustments to their settlement amounts if the lawsuit determines that USAA undervalued their vehicles. This could impact their financial recovery and the overall trust in their insurer.

The lawsuit could also result in delays for current policyholders awaiting total loss claims processing. These delays might prolong the time it takes for policyholders to receive their compensation, adding to their financial and emotional stress.

Furthermore, the allegations of undervaluing vehicles and breaching insurance contracts could erode the trust between USAA and its policyholders. This erosion of trust is a significant concern, as it impacts the long-term relationship between the insurer and its customers.

Legal Precedents and Implications

This is not the first instance of USAA’s valuation methods being contested, as seen in the Arevalo vs USAA case. Previous legal cases have challenged the use of CCC’s Market Value Reports, which plaintiffs argue lower the value of totaled vehicles. These reports have been a point of contention, with varying outcomes in different states.

The implications of these legal precedents are far-reaching. Insurance companies, including USAA, are incentivized to minimize indemnity losses by lowering the actual cash value payment for totaled vehicles with a salvage title while still selling the vehicle for scrap. The outcomes of these cases could influence the current lawsuit and future practices within the insurance industry.

Related Lawsuits and Settlements

An idol of Lady Justice.

Over the years, USAA has been the target of numerous class-action lawsuits, which encompass a range of issues affecting class members, including:

  • valuation
  • fees and charges
  • insurance premiums
  • interest rates
  • medical payments

These lawsuits highlight a pattern of legal challenges that the company has encountered, including issues related to class certification.

For instance, USAA agreed to reimburse thousands of policyholders over $8 million for inappropriately assessed late fees. Another case in Maryland involves policyholders seeking over $7 million in interest on improperly retained charges. These cases underline the recurring theme of policyholders disputing USAA’s practices and seeking fair compensation.

In California, USAA was accused of charging higher insurance premiums to enlisted military personnel compared to officers. These legal challenges reveal broader issues within the insurance industry and highlight the need for transparent and fair practices.

How to File a Claim

For those impacted by the Arevalo vs USAA lawsuit, it is crucial to comprehend the claim filing process. Claim Forms had to be postmarked or submitted online by December 15, 2023. To submit a claim, individuals require specific identification numbers, such as the unique claim number from the Notices or the vehicle identification number (VIN) of the Total Loss Vehicle.

Award payments for valid claim submissions were made on March 6, 2024. If a timely and valid claim was submitted and the payment was not received by March 22, 2024, individuals were advised to contact the Settlement Administrator at The Settlement Administrator could also be reached at 1-877-629-9695 for further assistance.

Frequently Asked Questions

What is the Arevalo vs USAA case about?

The Arevalo vs USAA case is a class action lawsuit in which Texas insureds claim that USAA underpaid fees and taxes on their total loss claims.

What are the main allegations against USAA?

The main allegations against USAA include underpayment of sales tax, title fees, and other related fees, as well as using unreliable methods to determine the actual cash value of totaled vehicles. This raises concerns about the company’s handling of financial and valuation practices.

How does the lawsuit potentially impact policyholders?

The lawsuit could potentially impact policyholders by leading to adjustments in settlement amounts, delays in claims processing, and diminished trust in USAA.

How can I file a claim related to this lawsuit?

You can file a claim related to the lawsuit by submitting it before the deadline, along with the required identification numbers. Claim submissions had to be made by December 15, 2023, so be sure to do this as soon as possible to ensure you meet the deadline.

What legal precedents might influence this case?

The outcomes of previous cases challenging USAA’s use of valuation reports could strongly influence the current lawsuit.

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