Sales Tax Class Action Settlement Against Allstate

Sales Tax Class Action Settlement Against Allstate

By Dave LaChance
Announcements | Insurance | Legal

Allstate has agreed to make payments to thousands of its policyholders in Pennsylvania to settle a class action lawsuit alleging the carrier violated state law by failing to include full sales tax in the loss claim settlement. total on vehicles leased in the past 10 years.

The class includes anyone who submitted a damage claim for a vehicle rented between January 1, 2012 and April 29, 2022 and did not receive full sales tax when Allstate adjusted their claim as total loss, according to the settlement agreement filed in the United States. District Court for the Eastern District of Pennsylvania.

Under the proposed settlement filed Sept. 1, Allstate agrees to pay class members the difference between the sales tax they were refunded and the full amount of the refund that should have been. State sales tax is 6%, with some counties adding an additional 1 or 2%.

The lawsuit was filed on January 18, 2019 by Michael Erby, a Pennsylvanian whose 2014 Honda Accord sedan was struck on August 25, 2016 by a Cadillac Escalade driven by a third party, which was insured by Allstate.

Erby said Allstate considered the vehicle a total loss and offered Erby $19,104.50. This sum included the CCC ONE market valuation of $18,144.50, a DMV fee of $60, and a negotiated adjustment of $900. Pennsylvania sales tax was not included, he said.

“Since plaintiff’s vehicle was totaled, plaintiff has accepted defendant’s offer of $19,104.50, rather than suffer a total loss of his vehicle without payment,” the complaint states, even though “in accordance with Pennsylvania law requires an insurer or carrier to reimburse the applicable sales tax to a party when reimbursing that person or corporation for the total loss of his vehicle”.

The complaint cites Pa. Code § 62.3(e)(4), which states that “the applicable sales tax on the replacement cost of a motor vehicle shall be included in the replacement value.”

“Upon settling a total loss claim, an insurance company is required to reimburse (sic) the sales tax on the replacement vehicle,” the complaint states. “Failure to do so is itself a violation of Pennsylvania law and/or the insurer’s contractual obligations.”

In seeking class certification for the lawsuit, the complaint said the plaintiff believed the class “consisted of thousands of policyholders statewide”, although “the exact number of class members is unknown because such information is under the exclusive control of the defendant”.

The suit accused Allstate of breach of contract, unjust enrichment, violation of Pennsylvania’s unfair trade practices law and consumer protection law, and violation of the Physical Damage Assessment Act. to motor vehicles.

In the settlement, all parties state that Allstate denies “any wrongdoing” and agreed to the settlement to “avoid further burden, expense and risk of prolonged litigation.”


Featured Image: An Allstate office in New Castle, Pennsylvania. (Murat Tanyel/Wikimedia Commons)

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