Geico Indemnity ACV Sales Tax on Leased Vehicles California Class Action

In recent years, a number of class actions have taken up the question of what insurance companies must include in their payouts of the actual cash value (ACV) for total losses of vehicles. This complaint says that Geico Indemnity Company does pay sales taxes for total losses of owned or financed vehicles. What Geico does not pay, it alleges, is sales taxes for total losses of leased vehicles. In a few cases, it claims, when Geico does pay an amount towards sales taxes, it is not enough.

Geico is a large insurer, the complaint says. Among the coverages it offers in its auto policies, the complaint notes, is comprehensive and collision coverage.

The complaint notes, “Pursuant to its standard Policy form language, Geico is obligated to pay insureds sales tax in making payment to insureds who suffer the total loss of an insured vehicle.” But what cost is that payment based on? The complaint alleges that “the amount of sales tax owed is based on the underlying adjusted vehicle value of the total loss vehicle at the time of loss (‘ACV sales tax’).”

The failure to pay this amount, the complaint alleges, is a breach of the policy.

The complaint quotes the policy, in a section called “Physical Damages Coverages,” as saying that Geico “will pay for collision loss to the owned auto or non-owned auto…”

It claims that the definition of “owned auto” is, among other things, any vehicle “for which a specific premium charge indicates there is coverage.” The complaint later adds, “In fact, the Policy specifically asserts not only that ‘owned auto’ includes any auto for which a premium is paid—even if financed or leased—but also that owned autos include autos leased for a period of over six months.”

As to ACV, no difference is made between owned, financed, or leased autos.

The complaint alleges that this means that the ACV is not further defined as, for example, including “(1) any provision excluding sales tax from ACV; (2) any provision deferring payment of the ACV sales tax for any purpose whatsoever; (3) any provision requiring an insured to obtain a replacement vehicle at all; or (4) any provision linking the amount of ACV sales tax to amounts originally paid for the total loss vehicle or amounts actually incurred in replacing the total loss vehicle.” It says that the ACV sales tax is thus “a predictable amount.”

The class for this action is all individual insureds under a California policy issued by Geico Indemnity Company with the same language in the policy, that covers a leased vehicle with private-passenger car physical damage with comprehensive or collision coverage, who made a first-party claim, for a vehicle that was a total loss under that coverage, where the total-loss payment did not include the full sales tax appropriate for the ACV, between October 23, 2016 and the date of certification of the class in this action.

Article Type: Lawsuit
Topic: Insurance

Most Recent Case Event

Geico Indemnity ACV Sales Tax on Leased Vehicles California Complaint

October 23, 2020

In recent years, a number of class actions have taken up the question of what insurance companies must include in their payouts of the actual cash value (ACV) for total losses of vehicles. This complaint says that Geico Indemnity Company does pay sales taxes for total losses of owned or financed vehicles. What Geico does not pay, it alleges, is sales taxes for total losses of leased vehicles. In a few cases, it claims, when Geico does pay an amount towards sales taxes, it is not enough.

Geico Indemnity ACV Sales Tax on Leased Vehicles California Complaint

Case Event History

Geico Indemnity ACV Sales Tax on Leased Vehicles California Complaint

October 23, 2020

In recent years, a number of class actions have taken up the question of what insurance companies must include in their payouts of the actual cash value (ACV) for total losses of vehicles. This complaint says that Geico Indemnity Company does pay sales taxes for total losses of owned or financed vehicles. What Geico does not pay, it alleges, is sales taxes for total losses of leased vehicles. In a few cases, it claims, when Geico does pay an amount towards sales taxes, it is not enough.

Geico Indemnity ACV Sales Tax on Leased Vehicles California Complaint
Tags: Auto Insurance, Incomplete payment of benefits due, Insurance, Leased Vehicles, Sales Tax