Liberty Mutual Settles Auto Insurance Underpayment Claims
Liberty Mutual Insurance Company has agreed to a $6.5 million class action settlement to resolve allegations that it systematically undervalued and underpaid total-loss auto insurance claims. If you had an auto insurance policy with Liberty Mutual and filed a total-loss claim between January 2018 and December 2025 in one of 12 affected states, you may be eligible for a payment.
What Was the Lawsuit About?
The class action alleged that Liberty Mutual used a proprietary vehicle valuation system that consistently undervalued totaled vehicles compared to fair market value. Specifically, the plaintiffs claimed that the company:
- Applied excessive "condition adjustments" that reduced vehicle values below comparable market listings
- Failed to include all standard equipment and features when calculating comparable vehicle values
- Used sale prices from distant geographic areas with lower market values rather than the policyholder's local market
- Deducted a "typical negotiation adjustment" of 3-5% from comparable vehicle prices, assuming buyers always negotiate below asking price
The net effect, according to the complaint, was that policyholders received $500 to $3,000 less than the true fair market value of their totaled vehicles.
Which States Are Covered?
The settlement class includes policyholders in the following 12 states:
- California, Florida, Georgia, Illinois, Massachusetts, Michigan, New Jersey, New York, Ohio, Pennsylvania, Texas, and Virginia
These states were selected based on the volume of total-loss claims and the specific valuation practices used by Liberty Mutual in each jurisdiction.
Who Is Eligible?
You may qualify for a payment if:
- You held an auto insurance policy with Liberty Mutual (including policies through Safeco, a Liberty Mutual subsidiary)
- You filed a total-loss claim that was paid between January 1, 2018 and December 31, 2025
- Your vehicle was located in one of the 12 covered states at the time of the claim
- You did not previously settle or litigate a claim against Liberty Mutual regarding the same total-loss payment
How Much Could You Receive?
Individual payments will depend on the number of valid claims filed and the size of each policyholder's underpayment. The settlement administrator estimates:
- Average payment: Approximately $150-$300
- Maximum payment: Up to $1,200 for policyholders with the largest documented underpayments
- Minimum payment: $25 for eligible class members who file a claim
How to File a Claim
- Online: Visit LibertyMutualAutoSettlement.com and fill out the claim form. You will need your policy number or claim number.
- By mail: Request a form from the Settlement Administrator at the address listed on the settlement website.
- Deadline: Claims must be filed by September 30, 2026.
If you no longer have your policy or claim number, the settlement administrator can look up your information using your name, date of birth, and approximate date of the total-loss claim.
Liberty Mutual denies all allegations and has not admitted any wrongdoing. The company agreed to settle to avoid the cost and uncertainty of continued litigation.
What Else You Should Know
If you believe your total-loss settlement was significantly undervalued (more than $1,200 below fair market value), you may want to consult with an attorney about opting out of the class action and pursuing an individual claim. The opt-out deadline is July 15, 2026.
The final approval hearing for the settlement is scheduled for August 20, 2026. If approved, payments are expected to be distributed within 60-90 days of final approval.
