Georgia's Commissioner of Insurance and Fire Safety Accuses Progressive of 'Gaming the System'
ATLANTA, GEORGIA - According to a CBS46 investigation published on cbs46.com, news reporters discovered a loophole that some auto accident insurance companies used to unfairly withhold money from Georgia drivers.
Georgia's Commissioner of Insurance and Fire Safety has created a new directive that could potentially put millions of dollars back into Georgian's pockets. Georgia's Commissioner of Insurance and Fire Safety, John King, has issued a new directive to car accident insurers that will force insurers to "stop cutting corners on total loss claims."
The new insurance directive was motivated by CBS46's investigation that showed Progressive computed "state ad valorem taxes for cars declared a total loss." Under Georgia law, car insurers are required to pay for ad valorem taxes (6.6%), tag, and associated fees. The current Georgia law requires auto accident insurers to make an additional payment, but does not specify how insurers are to calculate it.
By way of example, a driver with a 2020 Toyota Corolla went to arbitration and negotiated their vehicle's value was $25,000. The ad valorem taxes ($25,000 x 6.6-percent) was calculated $1,650 for taxes. However, Progressive offered only $1,118 in ad valorem taxes. Progressive pocketed $532 using the Georgia Department of Revenue's online ad valorem tax calculator. Progressive allegedly used the state's value of the vehicle ($16,950), in order to reduce the tax payout by more than $500.
According to Commissioner John King, once he found out about the miscalculations, he realized that action had to be taken to prevent this from occurring. The directive took effect on April 1, 2022. The directive eliminates the state's ad valorem tax calculator when calculating taxes to be paid to an insured on a first-party car accident claim. Auto insurers will now need to base the tax payment on the "agreed-upon cash value" of the motor vehicle.
Commissioner King states that this directive could put millions of dollars back into the pockets of Georgia drivers.
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