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USAA Agrees to Pay $5 Million to Settle Class Action Lawsuit

A judge still must approve the settlement, which would pay interest to the plaintiffs on improper late fees.

Chris Schafer
Written byChris Schafer
Chris Schafer
Chris SchaferDeputy Managing Editor, News and Marketing Content
  • 15+ years in content creation

  • 7+ years in business and financial services content

Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.

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Evelyn Pimplaskar
Evelyn PimplaskarEditor-in-Chief, Director of Content
  • 10+ years in insurance and personal finance content

  • 30+ years in media, PR, and content creation

Evelyn leads Insurify’s content team. She’s passionate about creating empowering content to help people transform their financial lives and make sound insurance-buying decisions.

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John Leach
Reviewed byJohn Leach
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John LeachSenior Insurance Copy Editor
  • Licensed property and casualty insurance agent

  • 8+ years editing experience

  • NPN: 20461358

John leads Insurify’s copy desk, helping ensure the accuracy and readability of Insurify’s content. He’s a licensed agent specializing in home and car insurance topics.

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Published | Reading time: 1 minutes

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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.

Fees exceeded capped rate

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.

What’s next? Details of the settlement

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.

Chris Schafer
Chris SchaferDeputy Managing Editor, News and Marketing Content

Chris is Insurify’s Senior Editor for home insurance. He’s a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more. He is passionate about breaking down complex subject material to make important information accessible to everyone. 

Chris began his career as a journalist, managing two weekly newspapers, then moving into marketing and content marketing roles. Before joining Insurify, Chris served as the content strategy manager at Siteimprove and as the content manager at Brandpoint, where he managed a team of content creators. 

Away from work, Chris is an active hockey player and proud father of two rambunctious little girls. Chris holds a Bachelor’s degree in English with a minor in mass communications from the University of Minnesota. 

Evelyn Pimplaskar
Edited byEvelyn PimplaskarEditor-in-Chief, Director of Content
Evelyn Pimplaskar
Evelyn PimplaskarEditor-in-Chief, Director of Content
  • 10+ years in insurance and personal finance content

  • 30+ years in media, PR, and content creation

Evelyn leads Insurify’s content team. She’s passionate about creating empowering content to help people transform their financial lives and make sound insurance-buying decisions.

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John Leach
Reviewed byJohn LeachSenior Insurance Copy Editor
Photo of an Insurify author
John LeachSenior Insurance Copy Editor
  • Licensed property and casualty insurance agent

  • 8+ years editing experience

  • NPN: 20461358

John leads Insurify’s copy desk, helping ensure the accuracy and readability of Insurify’s content. He’s a licensed agent specializing in home and car insurance topics.

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