GEICO Avoids Class Action Over Totaled Vehicle Payouts in New Jersey

A federal judge has declined to approve a class action lawsuit accusing GEICO of underpaying losses for totaled vehicles in New Jersey. The court declined to approve the class after concluding that individual issues outweighed the commonality of the proposed class.

The purported class action sought to challenge GEICO’s use of a factor, also used by other insurers, that adjusts the actual cash value (ACV) of a vehicle to account for the condition of the vehicle based on factors such as options and mileage, or as otherwise explained “to bring the ACV from retail to private party condition.”

Jessica Dinicola-Ortiz alleged GEICO contracted to pay her and class members the actual cash value for their totaled cars, but GEICO’s condition adjustment unlawfully changed that value. She alleged that GEICO underpaid her and she further maintained that GEICO similarly illegally adjusted the values for potentially tens of thousands of other New Jersey claimants.

The GEICO policy defined ACV as “the replacement cost of the auto or property less depreciation or betterment.” GEICO determines a vehicle’s ACV using a report from CCC Intelligent Solutions that calculates a vehicle’s ACV based on the computed values of purportedly comparable vehicles recently sold or listed for sale within the insured’s geographic area. CCC starts with the average retail price of vehicles of the same make, model, and year as the insured vehicle. CCC then makes “adjustments” to that base value that may be upward or downward based on factors such as options, mileage, and others.

That adjustment was the focus of the underlying claim in the class action case.

Renée Marie Bumb, chief judge in the U.S. District Court for New Jersey, found that Dinicokla-Ortiz could proceed with her individual claim alleging that GEICO underpaid her but that the class action against the insurer could not be certified.

The judge had two recent federal appeals rulings to support her decision to deny certification.

Judge Bumb looked to a 2024 Third Circuit Court of Appeals opinion (Lewis v. Gov’t Emps. Ins. Co.) that held only people who received less than their totaled vehicles’ ACV have standing to bring ACV claims. Even if the insurer’s process is flawed, standing demands an actual, not theoretical, injury. “Windfalls are not actionable,” the court noted.

The district court judge also referenced a 2025 opinion (Drummond v. Progressive Specialty Ins. Co.) in Pennsylvania in which the Third Circuit held that courts generally may not certify a class challenging whether an insurer paid class members actual cash value (ACV) for their totaled vehicles. The appeals court found that individualized questions predominate over questions common to the class.

Applying Lewis, the judge held that Dinicola-Ortiz plausibly alleged the $16,572.47 GEICO paid her is less than the ACV of her vehicle and thus her individual claim can proceed.

The Drummond court found that courts generally may not certify a class challenging whether an insurer paid class members ACV for their totaled vehicle. To start, the amount an insurer must pay its insured is set by each individual vehicle’s ACV and then how much an insurer actually paid each insured must be considered. “Because two essential elements of breach of contract—duty and breach—required plaintiff-specific proof, individualized evidence ‘overwhelmed’ class evidence, and the claims were unsuitable for class treatment,” the district court quoted from the Drummond case.

Judge Bumb noted that situation is the same in the Dinicola-Ortiz matter. That is, every proposed class member would have to furnish individual evidence of their vehicle’s ACV and that GEICO paid them less than that amount. “Those individualized assessments eliminate any efficiency gained through a class action,” she concluded.