Class Action Claims American Standard Miscalculated Tax for Total Loss Claims in Georgia

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A proposed class action claims American Standard Insurance Company of Ohio has underpaid total loss settlements in Georgia by miscalculating the motor vehicle title ad valorem tax (TAVT) owed to claimants.

According to the case, in the event a damaged car is declared a total loss, the defendant’s auto insurance policies require the insurer to pay the policyholder for the cost to replace the vehicle, which includes the car’s actual cash value, taxes and title and registration fees. The lawsuit argues, however, that American Standard has improperly used the vehicle values found in the Georgia Motor Vehicle Assessment Manual for Title Ad Valorem Tax to determine the TAVT instead of calculating the amount based on a vehicle’s base value as required by Georgia law.

Per the complaint, the TAVT manual valuation for totaled vehicles is usually lower than the cost to actually replace a vehicle, meaning it will yield a lower TAVT and thus save the defendant money in total loss settlements.

“Defendant used the TAVT Manual for valuation to determine TAVT instead of the valuation that Defendant used in adjusting Plaintiff’s claim so that Defendant could save money on Plaintiff’s and other Class Members’ claims,” the lawsuit summarizes.

As explained in the case, Georgia in 2013 replaced sales tax on motor vehicle purchases with a title ad valorem tax, which was calculated as a percentage of a vehicle’s fair market value as specified in the TAVT manual. Per the suit, the values in the TAVT manual are based on the average of a vehicle’s current fair market value and wholesale value, meaning they are generally lower than the cost to actually replace a totaled vehicle.

The lawsuit explains that while Georgia law previously dictated that the TAVT for used vehicles must be calculated based on their value in the TAVT manual, this requirement changed in January 2020. As of that month, the TAVT manual values were no longer used to calculate the TAVT for used vehicles purchased from dealers, and the tax was instead determined by applying the 6.6 percent tax rate to the price or “fair market value” of a vehicle, the lawsuit says.

“For example,” the complaint reads, “‘a used motor vehicle purchased from a new or used car dealer other than under a seller financed sale arrangement,’ is valued for TAVT purposes by assessing the ‘retail selling price of the motor vehicle, less any reduction for the trade-in value of another motor vehicle.’”

The lawsuit alleges, however, that the defendant has breached the terms of its insurance policies and Georgia law by continuing to use the TAVT manual valuation to calculate TAVT instead of determining the tax based on the car’s fair market value as determined by the insurer’s vehicle valuation provider.

The plaintiff, whose car was insured under an American Standard policy when it was damaged in a February 2021 collision, says her vehicle was determined by the defendant’s vehicle valuation provider to have a base value of $7,689.00, which represents the cost to purchase a similar vehicle from a dealer. As such, the TAVT owed to the plaintiff should have been $507.47, or 6.6 percent of $7,689.00, according to the suit. The complaint claims American Standard paid the plaintiff instead a TAVT of $453.75, a value derived from applying the 6.6 percent TAVT rate to a $6,875.00 valuation of the plaintiff’s vehicle found in the TAVT manual.

The lawsuit alleges this improper practice of using “the incorrect source for valuation” has caused the plaintiff and other claimants to be underpaid for their total loss settlements.

The case proposes to cover the following class:

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