The California Supreme Court will take up a class action lawsuit originally filed in San Diego by a group of enlisted USAA policyholders who allege they were overcharged by the insurance company.
The lawsuit alleges the firm, formally named the United Services Automobile Association, charged the plaintiffs higher auto insurance prices than officers, in violation of state law.
Consumer Watchdog, one of several entities representing the plaintiffs, says around 200,000 enlisted USAA customers were overcharged.
Proposition 103, which was approved by California voters in 1988, requires that good drivers receive the lowest available rate from insurance companies regardless of the policyholder’s rank. It also allows customers to file lawsuits for Prop 103 violations.
However, a San Diego federal judge ruled that a subsequent bill exempted companies that only insured military personnel from Proposition 103’s requirements.
The plaintiffs then appealed to the U.S. 9th Circuit Court of Appeals, but the appellate court ruled that due to differing interpretations of California’s insurance law by various California courts, the case should be handled by the state Supreme Court.
Consumer Watchdog said in a news release that the California Supreme Court’s decision would “ultimately affect millions of Californians who buy insurance for their autos, homes and businesses.”
Cyrus Mehri, co-counsel for the plaintiffs, said, “A law intended to preserve insurance programs serving military families should not become authority to charge enlisted servicemembers more. Proposition 103 guarantees qualifying good drivers access to the lowest-priced policy offered by an insurance group. USAA should not be allowed to evade that protection by sorting military families into different corporate affiliates based on pay level.”
