San Antonio USAA to Settle for $90 Million Following Alleged Life Insurance Overcharges

San Antonio’s USAA Life Insurance Company has agreed to settle a class action lawsuit over allegations of overcharging thousands of policyholders by using inflated rates to calculate charges. The settlement amount of $90 million, subject to final approval by a judge, will be split between approximately 122,000 current or former life insurance policy holders in varying amounts no less than $50. While USAA did not admit any liability over the issue, this settlement offer marks the end of a four year battle over this class action lawsuit.

In a court declaration filed by the plaintiffs’ attorney, USAA was accused of overcharging from $360 million to $460 million.

While subtle overcharging might not sound like a big enough deal to justify such a hefty settlement, considering the total range of money this alleged overcharging resulted in, it’s easy to see why policyholders were distressed. While the company continues to deny any unscrupulous behavior, policyholders who joined in the lawsuit found reason to be suspicious after noticing unexpected charges related to their life insurance policies, contacting professional actuaries and lawyers prior to filing the original suit. The official class action complaint alleged that USAA Life was using inflated rates to calculate charges, rather than taking solely into account the standard markers of a policyholder’s age, sex, rate class, and mortality expectations.

USAA Life Insurance services active and Veteran military personnel and their families.

Often praised for their support of military families, if the allegations of this lawsuit were true, USAA members would be justified in feeling disappointment in the company to which so many turn for help in everything from banking to benefits to life insurance. However, USAA maintains that serving active-duty and Veteran military families remains their primary goal, and that the $90 million settlement offer was only produced in an effort to avoid further litigation and move forward. While the bulk of the settlement is expected to go to qualified class members, attorneys for the plaintiffs as well as the settlement administrator will also receive a hefty chunk.

Insurance policies are notoriously complex to decipher; if you suspect that an insurance provider is dealing unfairly with you, it can be hard to detect without the help of an expert. If you have questions about your insurance provider’s conduct, it’s a good idea to reach out to an insurance bad faith attorney to discuss your options.