USAA Charges Enlisted Military Personnel Higher Insurance Premiums Than Officers for Same Coverage, Lawsuit Alleges

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A proposed class action alleges USAA General Indemnity Company (GIC) and United Services Automobile Association (USAA) have illegally discriminated against current and former enlisted military personnel on certain pay grades who have or had coverage for a vehicle garaged in Washington. 

The 18-page case alleges the defendants, together as USAA Group, “respect[] and honor[] current and former military officers much more than it does current and former enlisted personnel,” in particular by charging the latter, specifically those on active duty in pay grades E-1 through E-6 or who were veterans whose highest pay grade while active was in that range, higher premiums for the same type of coverage offered to officers. 

According to the suit, the defendants have essentially consigned enlisted policyholders to the “substandard” USAA General Indemnity Group, which allegedly charges higher premiums for auto insurance.  

The case relays that each of the four USAA Group companies insures a different segment of the military or military family members. Per the suit, USAA insures commissioned officers and senior non-commissioned officers in pay grades E-7 or higher, along with veterans who were in these pay grades. Defendant USAA General Indemnity Company (GIC) insures enlisted personnel in pay grades E-6 or below and veterans whose highest pay grade was E-6 or below, the case states. Further, USAA Casualty Insurance Company (CIC) insures the family members of those who qualify for USAA, and Garrison Property and Casualty Insurance Company insures family members of those who qualify for GIC, according to the complaint. 

According to the suit, the GIC base rate for bodily injury, property damage and collision liability coverage, which reportedly account for more than 80 percent of a consumer’s auto insurance premium for both defendants, is greater than that offered by USAA. 

The lawsuit, citing zip code-based “testing” done online by the plaintiff, claims that the average difference between officers and enlisted personnel in each USAA Group coverage level is $32.83.  

“The average premium of the Officer Policyholders is $119.50, while for Enlisted Policyholders it is $152.33,” the suit states. “In other words, in this sample, Enlisted Policyholders pay 27% more than identically situated Officer Policyholders.” 

The plaintiff, who enlisted in the Navy in 1989 and was honorably discharged due to partial colorblindness, says a letter he received in 2020 in response to a quote request from USAA Group failed to state that his enlisted status would be used as a factor in determining his insurance rate, or that he would be assigned to GIC as a result of his military status. 

“Plaintiff was insured by GIC from August 2020 to April 2022,” the suit reads. “During that period, USAA offered and sold Plaintiff only higher-priced GIC policies, not lower-priced USAA policies.” 

The lawsuit claims that the plaintiff’s last auto insurance policy with GIC would have been roughly 20 percent less expensive had it been issued by USAA. 

The lawsuit looks to cover all current and former enlisted persons who, at any point between May 20, 2018 and the date a class is certified, had auto coverage with USAA General Indemnity Company (GIC) while garaging their vehicle in the state of Washington, were on active duty in pay grades E-1 through E-6 or were veterans whose highest pay grade while active was in that range, and paid more for coverage with GIC that they would have paid with USAA. 

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