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Geico General Insurance Leased Vehicle ACV California Class Action

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Geico Mascot Gecko

A number of persons have filed class actions against auto insurance companies in the past year or so on the subject of the actual cash value (ACV) of totaled vehicles. This is another such lawsuit, with the complaint alleging that Geico General Insurance Company does not include sales tax in its calculation of a vehicle’s ACV.

The class for this action is all those insured under a policy issued by Geico in California that covers a leased vehicle, who had a total loss of the vehicle, between August 2, 2015 and the date of the certification of the class in this case, and who received a payment for the vehicle that did not include sales tax in the amount of the ACV settlement for the vehicle.  

Plaintiff Poonam Subbaiah is a resident of Los Angeles who leased a 2017 Porsche 911 Carrera. The auto was insured under a policy with Geico. Unfortunately, on December 8, 2018, the Porsche was stolen. Subbaiah submitted a claim to Geico which declared the vehicle a total loss.

Geico determined that the ACV payment should be “$87,345, comprised of the payoff amount to the lienholder minus the $500 GEICO policy deductible and the remaining amount of $17,211.26” to Subbaiah. However, Geico said that since the vehicle was leased and no owned, it did not owe Subbaiah any sales tax.

The complaint says that this is contradicted by the terms of the auto insurance policy. It quotes the policy as saying, “We will pay for each loss, less the applicable deductible, caused other than by collision to the owned or non-owned auto. This includes … loss caused by … theft…”

The complaint quotes the definitions section of the policy as saying, “The actual cash value is the replacement cost of the auto or property less depreciation or betterment.” 

According to the complaint, since there is no provision that excludes sales tax from the ACV or imposes any other requirement on Subbaiah.

In addition, the complaint quotes the California Code of Regulations as saying that an insured can elect a cash settlement for a total-loss vehicle, and that this “cash settlement amount shall include all applicable taxes and one-time fees incident to transfer of evidence of ownership of a comparable automobile.” It also says, “This procedure shall apply whether or not a replacement vehicle is purchased.”

The complaint alleges breach of contract and breaches of good faith and fair dealing as well as violation of California consumer protection laws.

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