NewsTeam 10 Investigates


Lawsuit claims USAA has violated the rights of enlisted personnel

USAA Lawsuit.PNG
Posted at 5:38 PM, Feb 09, 2021
and last updated 2021-02-09 21:06:58-05

SAN DIEGO (KGTV) - Current and former military officers are more respected by USAA than current and former enlisted personnel, a federal class-action lawsuit claims.

According to a federal complaint, USAA has violated the rights of enlisted personnel—those on active duty in pay grades E-1 through E-6 and veterans whose highest rank was in those grades.

The lawsuit states, "Defendants charge Enlisted Policyholders with collision coverage who qualify as good drivers under California law more for auto insurance than they charge officers with collision coverage who qualify as good drivers, in violation of California Insurance Code section 1861.16."

"USAA is treating enlisted people worse, charging them more for auto insurance than they charge officers," said attorney Harvey Rosenfield, founder of Consumer Watchdog. "In fact, they've created their own special company just for officers."

The lawsuit alleges USAA discriminates against enlisted military personnel and enlisted veterans by "consigning them to its substandard insurance company, USAA-GIC, which charges higher base rates for automobile insurance than does United Services. United Services offers insurance to current and former military officers, but not to Enlisted Policyholders."

According to the lawsuit, "By placing Enlisted Policyholders in its wholly-owned substandard subsidiary, USAA-GIC, which charges substantially higher premiums to policyholders with collision coverage than those USAA charges to Officer Policyholders with collision coverage through United Services, Defendants discriminate against enlisted persons on the basis of military status."

The lawsuit also alleges that USAA deceives enlisted policyholders by excluding military status in the complete list of information it considers in setting auto insurance premiums.

The two veterans behind the lawsuit say the company violated several California business and professional codes, the Unruh Civil Rights Act, and the Military and Veterans Code.

Rosenfield points to Proposition 103, passed by California voters in November 1988. He says it established the definition of a good driver under California law and mandated that insurers sell a good driver discount policy to anyone qualifying as a good driver at 20% less than he or she would otherwise pay.

"The law says it doesn't make a difference if you're a big conglomerate like USAA and you have one company there and one company there, different affiliates," he said. "It doesn't make a difference. They have to give good drivers the lowest possible price for auto insurance that's sold by any affiliate of USAA."

In an emailed statement, a spokesperson for USAA told ABC 10News, "We are reviewing the suit and evaluating our legal options. For nearly 100 years, USAA has served the military community by providing products and services to meet their needs. We are looking forward to defending our record of service to the military community."

The lawsuit asks for an order preventing USAA from continuing to charge high premium rates to Enlisted Policyholders. It also asks the company to pay back alleged overcharges to people who it claims were improperly priced on their auto insurance premiums.

“They have a strong reputation for quality which makes what they are doing here to enlisted people a surprise and troubling,” Rosenfield said.