Class Action Claims Safeco Failed to Include Sales Tax in Total Loss Payments

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A proposed class action claims Safeco Insurance Company of Illinois has failed to include sales tax in payments made to insureds whose vehicles were declared a total loss.

The nine-page breach-of-contract case claims Safeco promises in its standardized auto insurance policies to pay for “direct and accidental loss” to a covered vehicle, and that, “[i]f we pay for loss in money, our payment will include the applicable sales tax for damaged or stolen property.” According to the lawsuit, however, it is Safeco’s practice to exclude sales tax when paying total loss claims.

The plaintiff, whose 2014 Jeep Patriot Latitude 4WD was insured under a Safeco policy, says his vehicle sustained loss or damage in January 2021, after which he filed a claim for property damage with the defendant. Per the case, Safeco’s third-party vehicle valuation vendor, CCC, determined the plaintiff’s vehicle to be a total loss, with a base vehicle value of $6,944.00 and an adjusted vehicle value of $7,057.00. CCC calculated the sales tax on the adjusted vehicle value to be $564.56, according to the suit.

Safeco, however, removed the sales tax when making a payment to the plaintiff, and paid only the adjusted vehicle value of $7,057.00 minus the deductible of $500.00 for a total payment of $6,557.00, the case relays. The suit alleges Safeco breached its contract with the plaintiff by failing to include sales tax in his total loss payment.

“Nothing in the Policy unambiguously excludes sales tax or contradicts Defendant’s promise to pay sales tax where it pays for the loss in money,” the complaint contends.

The lawsuit looks to cover the following proposed class:

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