First Acceptance Insurance Co. (FAI) is headed to a Florida courtroom following a filed class action lawsuit from one of its policy holders. Derrick McGowan alleges AI “systematically underpaid thousands of its insureds by not paying for state and local title transfers, vehicle registration fees and sales taxes when calculating payouts for total loss claims.”
McGowan also claims FAI was in breach of contract and asked the court to declare that First Acceptance’s policyholders submitting total loss claims be entitled to “full total loss payments,” (FTLP) which the filed complaint defines as any mandatory regulatory taxes, costs and fees required to replace the vehicle. According to court documents, McGowan is also after benefits owed for the unpaid fees and taxes, as well as costs, prejudgment and post judgment interest and attorney fees.
“Upon information and belief, FAI, pursuant to a standard and uniform business practice, never pays insureds FTLP after a total-loss to an insured vehicle, notwithstanding its contractual obligation to do so,” reads a portion of the complaint.
McGowan submitted a claim to FAI following his car accident in June 2017, while his vehicle was covered under the company’s insurance. McGowan alleges a third-party vendor, CCC Information Services Inc. (CCC), determined his car had a total valuation of $12,493.34.
“ … Notably, CCC, in determining the actual cash value (ACV), included a line item for taxes. No amount for title transfer fee or tag transfer fee was included in the amount listed in the CCC Market Valuation Report. Instead the Report noted that the Total Value of $12,493.34 may not reflect the settlement amount because items such as “license and fees” were not taken into account in determining value, and may need to be taken into account prior to final determination of the settlement amount,” a portion of the complaint reads.
FAI then paid McGowan $11,239 after factoring in his $500 deductible from the $12,493.34 figure, as well as $754.34 in applicable state and local taxes, according to the complaint.
“Defendant’s payment of $11,239.00 did not include amounts for title transfer, tag transfer, or taxes (previously defined herein as FTLP) and was thus not an ACV in breach of its contract with plaintiff, which promised to pay the full market value of the total loss of an insured’s vehicle. Sales tax, title transfer fees and tag transfer fees (FTLP) are mandatory applicable fees that must be paid to replace any vehicle in the State of Florida,” a portion of the complaint reads.
McGowan is currently seeking benefits owed for the unpaid fees and taxes, as well as costs, prejudgment and post judgment interest and attorney fees.
At press time, FAI had not yet responded to requests for comment from glassBYTEs. Check glassBYTEs.com for coverage of FAI’s response to these claims, once those documents become available.