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USAA has agreed to a $647,000 class action settlement over allegations it underpaid sales tax and fees on totaled leased cars in Michigan. Discover if you qualify for a cash payment before the October 2026 deadline.
United Services Automobile Association (USAA) has agreed to pay more than $647,000 as part of a class action settlement resolving allegations that the insurer underpaid sales tax and official vehicle fees to Michigan drivers whose leased cars were declared total losses.
The $647,263.74 settlement resolves claims that USAA failed to reimburse policyholders for the full amount of Michigan’s 6% sales tax, along with mandatory title transfer and registration fees, following first-party total loss vehicle claims. If you held a USAA auto insurance policy in Michigan and had a leased vehicle declared a total loss between January 27, 2015, and March 11, 2026, you may be eligible to submit a claim for cash compensation.
Affected policyholders must file a valid claim form by October 8, 2026, to receive financial reimbursement under the court-approved agreement.
The class action litigation targeted USAA’s claims settlement practices for leased vehicles that were deemed total losses following accidents or other covered damage. Under Michigan law and standard auto insurance policy agreements, when an insurer determines a vehicle is a total loss, it is required to pay for the actual cash value of the vehicle as well as the associated government fees and mandatory taxes required to replace it.
Plaintiffs in the lawsuit alleged that USAA systematically underpaid policyholders by excluding or discounting full sales tax and regulatory costs from their overall insurance payouts. Specifically, the suit claimed that USAA failed to include the full state sales tax rate and statutory vehicle registration and title transfer charges when settling total loss claims on leased automobiles.
Because drivers on leased vehicle contracts remain obligated for regulatory costs and replacement taxes, underpaying these mandatory line items left policyholders with out-of-pocket expenses that should have been covered by their insurance policies.
When a car insurance company handles a total loss claim, state insurance regulations and contract terms generally require the payout to reflect what it costs to make the policyholder whole. This standard financial recovery typically includes:
State Sales Tax: In Michigan, a 6% sales tax applies to vehicle transactions. Insurers are required to factor this full percentage into total loss settlements based on the vehicle’s market value.
Title Transfer Fees: State fee required to legally register a title transfer for a replacement vehicle (set at $15 per vehicle in Michigan).
Vehicle Registration Fees: Mandatory state administrative fees required to license and register a replacement car (set at $8 per vehicle in Michigan).
When an insurance carrier automatically caps, omits, or delays paying these required line items on leased vehicles, it violates the core promise of first-party comprehensive and collision coverage. Class action lawsuits provide a way for policyholders to challenge these systemic underpayments and recover unpaid statutory fees.
USAA provides financial products and auto insurance coverage primarily to active-duty military members, veterans, and their families. In response to the Michigan class action, USAA denied all allegations of wrongdoing, breach of contract, or statutory violations.
The company maintained that its claim processing procedures complied with applicable policy language and state insurance guidelines. However, to avoid the high costs, delays, and uncertainties of prolonged court litigation, USAA agreed to establish a $647,263.74 settlement fund to resolve all claims brought by the class.
The settlement agreement explicitly notes that the fund does not constitute an admission of fault or liability by USAA.
You may be eligible to receive a financial cash payout from the settlement fund if you meet all of the following requirements:
You were insured under a USAA auto insurance policy issued in Michigan.
You made a first-party insurance claim with USAA between January 27, 2015, and March 11, 2026, for a leased vehicle.
USAA determined that your leased vehicle was a total loss.
Your total loss settlement payout did not include the full amount of applicable Michigan sales tax, title transfer fees, or vehicle registration fees.
Class members who previously received partial payouts or whose files were closed without tax reimbursement are covered under the scope of this class action.
Individual payout amounts will vary based on the original valuation of your totaled leased vehicle and the specific fees that USAA failed to reimburse during your original insurance claim:
Unpaid Sales Tax Reimbursement: Class members can receive up to Michigan’s full 6% sales tax calculated on the market value of the totaled vehicle as recorded in USAA’s claim files, minus any sales tax amount already paid.
Title Transfer Fee Payment: Eligible class members can receive up to $15 per vehicle for unpaid title transfer fees.
Vehicle Registration Fee Payment: Eligible class members can receive up to $8 per vehicle for unpaid state registration fees.
Payments will be distributed directly to eligible claimants who submit a timely and verified claim form after final court authorization.
If you are an eligible class member, you must adhere to several court-mandated deadlines to protect your rights or claim your cash reimbursement:
Exclusion and Objection Deadline: July 10, 2026 (Passed). This was the final date to opt out of the settlement class or submit formal legal objections to the court.
Final Approval Hearing: September 8, 2026. The court will review the terms of the settlement to issue final judicial approval.
Claim Submission Deadline: October 8, 2026. All claim forms must be submitted online or postmarked by this date to receive settlement benefits.
If you take no action, you will remain part of the settlement class, forfeit your right to file an individual lawsuit against USAA regarding these claims, and receive no cash payout.
Claim forms can be submitted online through the official settlement website or filled out and delivered by mail to the court-appointed Settlement Administrator.
When submitting your claim, you will generally need to provide:
Personal Information: Your full legal name, current mailing address, phone number, and email address.
Claim Identifiers: Your USAA policy number, claim number, or the Claimant ID printed on the class notice sent to you by mail or email.
Vehicle Details: Basic identifying details regarding your leased vehicle and the approximate date of the total loss event.
If you received direct notice of this settlement by mail or email, your notice contains personalized identification codes that streamline the online claim entry process.
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