Judge gives class-action status to suit against San Antonio-based USAA

The lawsuit, filed by two service members in California, accuses the insurance giant of pushing enlisted military personnel toward higher-priced policies.

click to enlarge A suit filed in California by two USAA members accuses the company of steering enlisted personnel into pricier insurance products. - Courtesy Photo / USAA
Courtesy Photo / USAA
A suit filed in California by two USAA members accuses the company of steering enlisted personnel into pricier insurance products.
Editor's note: This story was updated to include a statement from USAA officials.

A federal judge in San Diego has granted class-action status to a lawsuit filed by two enlisted service members who say San Antonio-based insurer USAA directed them toward pricier policies than available to officers, the San Diego Union Tribune reports.

The suit — filed in 2021 by a Marine Corps radio operator and an Army culinary specialist living in California — maintains that the company uses deceptive practices to favor officers over enlisted personnel, according to the newspaper. Founded in 1922, the company specializes in offering financial services to military personnel and their families.

In a ruling late last month, Judge Robert S. Huie said a portion of the case could move forward as a class action to glean whether USAA applied “good driver” discounts equally between enlisted personnel and officers, the Union Tribune reports.

In an emailed statement, USAA spokesperson said the firm is committed to serving the military and that it offers competitive pricing.

"USAA is well known for its service to the entire military community, and the allegations in this suit have no merit," the spokesperson said. "California law allows USAA to serve members in the manner we do, and our rates are examined and approved by regulators."

Some 200,000 USAA policyholders in California could be part of the represented class, according to the Union Tribune.

A loss in the court fight also could be a marketing black eye for USAA, which expanded its eligibility beyond officers to include enlisted personnel in 1996. The firm subsequently expanded its advertising and marketing outreach to include national TV ad campaigns targeting enlisted military.

A separate class action suit filed in Washington Superior Court in November accuses USAA of skirting its responsibility to pay policyholders' medical bills by using an outside computer system designed to cut its payouts for healthcare claims.

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Sanford Nowlin

Sanford Nowlin is editor-in-chief of the San Antonio Current.


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