USAA Settles Michigan Total Loss Lawsuit for $647K Over Unpaid Fees

While USAA built its reputation on serving military families with competitive auto coverage, a class action lawsuit alleged the carrier shortchanged Michigan policyholders on mandatory fees after their leased vehicles were totaled.

According to Claim Depot, USAA has agreed to pay at least $647,263.74 to resolve allegations that it failed to pay the full amount of Michigan sales tax and vehicle regulatory fees on first-party total loss claims involving leased vehicles. The settlement, detailed by Claim Depot, covers claims filed between January 27, 2015 and March 11, 2026. If you carried a USAA Michigan auto insurance policy on a leased vehicle during that window, you may be entitled to a cash payment.

USAA Faces $647K Payout Over Missing Fees on Totaled Leased Vehicles

The lawsuit at the center of this settlement did not target USAA's core vehicle valuation practices. Instead, it zeroed in on two specific line items that policyholders say went unpaid: Michigan sales tax on the total loss value, and state vehicle regulatory fees.

USAA denied the allegations. However, as Claim Depot notes, the company agreed to settle "to avoid the expense and uncertainty of continued litigation, and a possible trial." That phrasing matters for Michigan policyholders: it means no court found USAA liable, but the company chose resolution over risk.

For drivers navigating Michigan auto insurance requirements, which already rank among the most complex in the country, this kind of fee dispute can easily go unnoticed in a total loss payment summary.

What Michigan Policyholders Say USAA Shortchanged Them On

The core allegation is precise. Class members claim that when USAA settled their total loss claims on leased vehicles, the payment they received did not include the full applicable Michigan sales tax or the standard vehicle regulatory fees the state requires.

Michigan law applies a 6% sales tax to vehicle transactions. On top of that, state regulatory fees include a $15 title transfer fee and an $8 vehicle registration fee per vehicle. These amounts may appear modest in isolation. But across hundreds or thousands of claims spanning over a decade, they add up to the settlement figure now on the table.

"The class action lawsuit alleged that USAA did not pay the full amount of Michigan sales tax and vehicle regulatory fees to policyholders who insured leased vehicles under Michigan auto insurance policies and whose vehicles were declared total losses."

The Save Max Quote Index consistently shows that Michigan policyholders carry some of the highest average premiums in the nation, making every dollar of a total loss payout consequential. The SMQI, drawn from 3.3 million+ real quote requests, reflects how sensitive Michigan consumers are to any gap between expected and actual claim reimbursement.

Who Qualifies to File a Claim

Not every USAA policyholder in Michigan is automatically a class member. Three conditions must all be true simultaneously.

First, you must be or have been insured by USAA under a Michigan automobile insurance policy that covered a leased vehicle under private-passenger physical damage coverage, including collision and physical damage other than collision.

Second, you must have made a first-party claim between January 27, 2015 and March 11, 2026 for a covered leased vehicle that USAA determined to be a total loss.

Third, the total loss payment you received must not have included the full amount of the applicable Michigan sales tax and vehicle regulatory fees.

All three boxes must be checked. If your vehicle was owned outright rather than leased, you are not part of this class. The distinction between leased and owned vehicles is central to the lawsuit's allegations.

Drivers in neighboring states such as Ohio and Indiana who carry USAA coverage are not part of this settlement, which is strictly limited to Michigan-issued policies.

How Much Money Class Members Could Receive

Payments are calculated individually based on what USAA already paid versus what was owed. The table below outlines the three components.

Each eligible claim is calculated net of prior payments. If USAA already paid part of the sales tax or one of the regulatory fees, your settlement payment reflects only the remaining unpaid portion.

Policyholders with more than one qualifying insurance claim must submit a separate claim form for each individual claim. That means a higher potential recovery if you had multiple total loss events during the class period.

Where the $647K Settlement Fund Actually Goes

The full settlement fund allocation breaks down across four categories, giving you a transparent picture of where the money flows before it reaches claimants.

"The settlement fund will include: Settlement administration costs: To be determined; Attorneys' fees and expenses: Up to $174,761.21; Service award to class representative: Up to $5,000; Payments to approved claimants: Up to $647,263.74."

Attorney fees and expenses are capped at $174,761.21. The class representative who brought the lawsuit on behalf of all policyholders can receive a service award of up to $5,000. Settlement administration costs, handled by Rust Consulting Inc., are listed as to be determined.

The remaining funds flow to approved claimants. The claim deadline of October 8, 2026 is the controlling factor: only claims filed on time will share in that pool.

For context, policyholders in states like Minnesota and Wisconsin who carry USAA policies operate under different state fee structures and are unaffected by this Michigan-specific settlement.

What this means for you

If you held a USAA Michigan auto insurance policy on a leased vehicle and received a total loss payment between January 27, 2015 and March 11, 2026, file your claim before October 8, 2026. Submit online or mail a completed PDF claim form to Marchek Settlement Administrator c/o Rust Consulting Inc. at PO Box 2599, Faribault, MN 55021-9599. Have your Claimant ID from the settlement notice, your insurance claim number, and your date of loss ready before you start. Payments will be issued by paper check after the court grants final approval of the settlement and claim processing is completed.

Key Dates at a Glance

• Exclusion deadline: July 10, 2026
• Final approval hearing: September 8, 2026
• Deadline to file a claim: October 8, 2026

FAQ

Who is covered by the USAA total loss settlement in Michigan?

Class members are Michigan USAA policyholders who insured a leased vehicle under private-passenger physical damage coverage and made a first-party total loss claim between January 27, 2015 and March 11, 2026. You must also have received a total loss payment that did not include the full applicable Michigan sales tax and vehicle regulatory fees.

What fees does the settlement cover?

The settlement covers three specific items: Michigan's 6% sales tax applied to the total loss vehicle value, a $15 title transfer fee, and an $8 vehicle registration fee. Each payment is calculated net of what USAA already paid, so your individual amount depends on your specific claim history.

How do I file a claim for the USAA Michigan settlement?

You can file online or print and mail the PDF claim form to the settlement administrator. The mailing address is Marchek Settlement Administrator c/o Rust Consulting Inc., PO Box 2599, Faribault, MN 55021-9599. You will need your Claimant ID from the settlement notice, your insurance claim number, and your date of loss.

When will settlement payments be issued?

Payments will be issued after the court grants final approval of the settlement and claim processing is completed. The final approval hearing is scheduled for September 8, 2026, and the claim filing deadline is October 8, 2026.

Did USAA admit wrongdoing in this settlement?

No. USAA denied the allegations but agreed to settle to avoid the expense and uncertainty of continued litigation and a possible trial. The settlement is not an admission of liability.

About Brooke Grissom

Brooke Grissom is an Independent Insurance Analyst at Save Max Auto, licensed in Property & Casualty and Health insurance. She covers data-driven market trends, cross-state premium comparisons, and carrier financial analysis. Read more from Brooke Grissom →

Edited by Taleah McGuire.

Methodology

This article is grounded in the source linked above. Save Max Auto data points referenced here are drawn from the Save Max Quote Index (SMQI), a proprietary instrument reflecting 3,364,317 real consumer quote requests submitted to savemaxauto.com. State and carrier rankings reflect the lifetime dataset; year-over-year shifts reflect a rolling 12-month window. The index is refreshed monthly. External authority figures referenced (NAIC, NHTSA, state regulators) reflect the most recent public data releases available at time of writing.

Sources

• Primary source: Claim Depot, "USAA $647K Total Loss Class Action Settlement"