USAA General Indemnity CRA Improperly Paid to Lienholder Class Action

This class action addresses the issue of Car Replacement Assistance (CRA) on vehicles that were total losses that are insured by USAA General Indemnity Company. The complaint alleges that USAA pays CRA amounts to those who hold liens on the totaled vehicles and that this is improper.

When a person buys a vehicle with an auto loan, the party that provided the loan has a lien on the vehicle. That is, if the person doesn’t make payments on the loan, the lienholder may take the vehicle; and if the vehicle is sold, the lienholder has a claim on the proceeds of the sale.

When a vehicle is totaled, USAA pays the vehicle’s actual cash value (ACV), which the complaint says is defined in the USAA policy as “the amount that it would cost, at the time of the loss, to buy a comparable vehicle.” The complaint states, “The ACV is the maximum amount that USAA is required to pay on a total loss physical damage claim.” This is because lienholders have a security interest in the vehicle.

According to the complaint, “Under Florida law, a holder of a security interest has a claim to collateral proceeds only ‘[t]o the extent of the value of the collateral.” Other states have similar provisions.

However, the complaint claims, “USAA breaches its Policies by paying the lienholders in excess of the amounts they are permitted to recover under Florida law and the law of each of the 50 states. These excess payments are in the form of CRA.”

But CRA, the complaint says, is a “separate and additional payment of 20% of the ACV of the total loss vehicle to assist the insured with purchasing a replacement vehicle.” It is not meant to compensate anyone for the loss of the original vehicle. “Instead, the payment is to make sure that [the owner of the totaled vehicle] will have sufficient funds to purchase a replacement vehicle.”

In that sense, the complaint says that the CRA payment is not intended to be a payment for the value of the vehicle. It says, “In this respect, CRA is no different from other provisions of insurance that may apply to the collision (such as towing coverage, vehicle contents, rental coverage, medical payments insurance, or uninsured motorist bodily injury coverage).”

The USAA Class for this action is all persons who were insured by USAA General Indemnity Company under a policy that is for private passenger auto physical damage and which was issued in the US, who bought CRA, and who suffered a first party total loss of a covered vehicle at any time between November 3, 2015 through the date of class certification in this case, where the claim was for a total loss and where USAA paid all or part of the CRA to a lienholder.

A USAA Florida Subclass has also been defined, for those with Florida policies.

Article Type: Lawsuit
Topic: News

Most Recent Case Event

USAA General Indemnity CRA Improperly Paid to Lienholder Complaint

November 3, 2020

This class action addresses the issue of Car Replacement Assistance (CRA) on vehicles that were total losses that are insured by USAA General Indemnity Company. The complaint alleges that USAA pays CRA amounts to those who hold liens on the totaled vehicles and that this is improper.

USAA General Indemnity CRA Improperly Paid to Lienholder Complaint

Case Event History

USAA General Indemnity CRA Improperly Paid to Lienholder Complaint

November 3, 2020

This class action addresses the issue of Car Replacement Assistance (CRA) on vehicles that were total losses that are insured by USAA General Indemnity Company. The complaint alleges that USAA pays CRA amounts to those who hold liens on the totaled vehicles and that this is improper.

USAA General Indemnity CRA Improperly Paid to Lienholder Complaint
Tags: Auto Insurance, Incomplete payment of benefits due, Insurance