Last Updated on January 26, 2025 by The HD Post Staff

CALIFORNIA – A Southern District of California court dismissed a class action suit against United Services Automobile Association (USAA), January 9, which claimed the company violated California law by charging enlisted military members higher premiums than military officers.

United States District Judge Robert S. Huie ruled in favor of USAA finding that the company’s practice of assigning policies based on military rank is permitted under the law, even though it limits some good drivers from accessing the lowest-rate policies.

USAA’s legal representative, Gibson Dunn, said the plaintiffs sought nearly a billion dollars in damages and demanded changes to the company’s business model. 

“With this ruling, USAA has defeated every claim asserted in the complaint,” said Gibson Dunn in a statement.

‘Intentionally discriminated against enlisted policyholders’

USAA offers insurance to members of the military and their families through its four subsidiaries, each of which insures a different segment of the military or military family members.

General Indemnity Company (GIC) insures enlisted people in pay grades E-1 through E-6. 

In 2021, the plaintiffs in the case sued USAA claiming that GIC charges policyholders higher base rates for collision coverage than does USAA.

“Because enlisted personnel are automatically placed in GIC based on their military status and pay grade, they are consequently charged higher premiums than officers placed in USAA for the same coverage,” said the court document.

Plaintiffs allege that this practice violates California Insurance Code by denying the subclass of enlisted “good drivers” access to the lowest rates available from the USAA family of insurance companies. 

“The California Insurance Code provides that every person who qualifies as a “good driver” may purchase a “Good Driver Discount policy” from the insurer of their choice that is at least 20 percent less than the rate they would otherwise pay for the same coverage,” said the court document.

The plaintiffs claim that by placing enlisted people in GIC and charging them higher premiums than if they were officers, USAA “intentionally discriminated against Enlisted Policyholders on the basis of their military status.”

Exceptions can limit general consumer protections

USAA argued that the law allows them to limit insurance offerings to certain groups, like military officers, and that this overrides the rule plaintiffs rely on.

The court found that because USAA separates officers and enlisted personnel (GIC), the different rates are allowed under California law.

“As another example, Section 1861.02(b)(3)(A), allows motor clubs like AAA to require membership as a condition of obtaining insurance,” said the court document.

The court also agreed with the company’s argument that all of their subsidiaries’ rates went through a review process and the California Department of Insurance (CDI) deemed them fair and reasonable.

The military members opposing USAA say they plan to appeal the judge’s decision.

The case is Coleman, et al. v. United Services Automobile Association, et al.