Liberty Mutual Insurance Co. Sued Over Alleged Underpayment of Total Loss Claims

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A proposed class action lawsuit filed in Florida federal court claims Liberty Mutual Insurance Company fails to include certain fees in payments made to auto insurance policyholders for total loss claims.

According to the lawsuit, Liberty Mutual represents in its insurance policies that it will pay the actual cash value (ACV)—or, the full cost to replace a vehicle—when a car is declared to be a total loss after an accident. Contrary to these representations, the insurance agency, the case says, fails to include state and local title transfer and vehicle registration fees as part of the vehicles’ ACV paid out to policyholders.

Per the plaintiff, the suit says the woman submitted a claim to Liberty Mutual after her car was involved in an accident, and a third-party vendor determined that the vehicle, declared to be a total loss, had a value of $9,096.04. The valuation report allegedly noted that the car’s total value may not reflect the settlement amount because it did not include “license and fees.” Nevertheless, the case says, the defendant’s final payment to the plaintiff failed to cover title transfer fees and tag transfer fees—mandatory costs that must be paid in the state of Florida in order for a replacement car to be legally driven. In Florida, the minimum title transfer fee is $75.25, the suit says, and the fee to transfer a license plate is at least $4.50.

The lawsuit argues that the defendant, as a matter of policy, never pays the full amount for total loss claims, “notwithstanding its contractual obligation to do so.”