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Four units of USAA have agreed to pay a total of $5 million to settle a class action lawsuit brought forth on behalf of more than 127,000 Maryland policyholders. The suit alleged that USAA had failed to pay the penalties and interest to the plaintiffs after it improperly charged them fees for late premium payments.
This payment marks the latest step in a suit that was originally filed in June 2021. The suit alleged that USAA’s practice of assigning late fees violated Maryland’s insurance code.
The suit alleges that USAA levied $8.2 million in late fees between June 2011 and August 2018.
USAA says the late fees were legal because it had gotten prior approval for such fees from the Maryland Insurance Administration, according to the court filing made last week.
The four USAA units identified in the suit filed new rate structures in Maryland in 2019 that capped fees at $10. But the lawsuit stated that the insurer continued to charge fees in excess of $10 to people with assets in Maryland but billing addresses outside the state.
Maryland and the four units agreed to a consent order in 2020 to correct fee issues and refund all improperly collected fees. The results totaled roughly $7.3 million.
The recently announced $5 million settlement rewards plaintiffs for the interest accrued while USAA had control of the collected fees.
In addition to the $5 million settlement, USAA will also cover any associated communications costs that the more than 100,000 suit members incurred.
Each settlement member will receive at least $5 in compensation, and up to $3 million of the total settlement will go toward the plaintiffs. The remaining $2 million will cover legal fees and service awards for the lead plaintiffs whose names appear on the suit. Walter Black, the lead plaintiff, will receive $7,500, and three other named plaintiffs will receive up to $3,500 each.
The settlement will require approval from a judge.
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10+ years in insurance and personal finance content
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Licensed property and casualty insurance agent
8+ years editing experience
NPN: 20461358
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