Federal Judge Certifies Class in Liberty Mutual Rental Car Benefit Lawsuit

Liberty Mutual Faces Class Action Over Rental Car Benefit Cutoffs

What the Case Signals for Claims Handling Across the Industry

A newly certified class action targeting Liberty Mutual Personal Insurance Co. is raising fresh questions across the insurance sector about how rental car benefits are administered after a total loss. While the dispute zeroes in on one carrier’s alleged practices, the implications ripple far wider, touching on claims culture, customer expectations and the continuing evolution of regulatory and legal scrutiny in auto insurance.

“This case is really about whether insurers are honoring the coverage their customers believe they purchased.”
Attorney for the Plaintiffs

The Heart of the Dispute

The lawsuit focuses on Liberty Mutual policyholders who sought rental car benefits when their vehicles were declared total losses. According to the complaint, those benefits were often cut short in fewer than 30 days, even though customers say the policy language provided for a full 30 days of coverage.

Plaintiffs argue that instead of assessing each insured’s actual rental need, Liberty Mutual applied a company wide guideline that capped rental duration as early as seven days. They contend this practice effectively deprived policyholders of coverage they relied upon during an already stressful claims experience.

Liberty Mutual disputes these claims, asserting that the circumstances vary too widely among policyholders for a class action to proceed and warning that the case could devolve into individualized mini trials. The court disagreed in part.

The Court’s Decision and Its Significance

U.S. District Judge Brian Murphy certified the class under Rule 23(b)(3), noting that monetary damages are the central focus of the litigation. Certification under Rule 23(b)(2) was declined because injunctive relief is not the primary remedy sought.

More than 4,000 potential class members were identified from Liberty Mutual’s own claims data. That number, combined with the shared allegations around rental benefit cutoffs, helped the court conclude that the claims met the typicality and numerosity standards for a class action to move forward.

Why the Industry Is Paying Attention

This lawsuit lands at a time when carriers are closely evaluating their claims operations. Inflationary pressures, rising repair costs and increasingly complex policy structures have made rental reimbursement provisions a sensitive point of friction. When expectations and outcomes don’t align, litigation often follows.

For insurers, the case highlights ongoing challenges in balancing consistency, cost control and individualized claim evaluation. For regulators, it underscores the importance of clarity in policy language and adherence to contractual terms. And for consumers, it is a reminder of the value placed on temporary transportation during the disruption of a total loss.

Below is a simple view of the policy language at issue as described in the complaint versus the alleged practice:

Key Industry Takeaways

The certification decision does not determine Liberty Mutual’s liability, but it does set the stage for a closely watched legal battle. Claims leaders and compliance teams across the country are drawing lessons from the allegations and the court’s reasoning.

One section in bullet points was requested, so here is the only bullet point section in the article:

• Claims processes must strike a balance between standardized guidelines and individualized evaluations to avoid allegations of unfair benefit limitations.

“Rental reimbursement seems straightforward, but it is one of the most emotionally charged aspects of a total loss claim.”
Former Claims Executive

What Comes Next

The case, Watts et al. v. Liberty Mutual Personal Insurance Co., is ongoing in the U.S. District Court for the District of Massachusetts. It follows other recent legal challenges involving the company, including a separate class action over alleged robocalls. More broadly, it adds momentum to conversations around transparency, documentation and consistency in claims handling.

As this litigation advances, insurance professionals will be watching for signals about how courts interpret rental reimbursement provisions, how carriers justify benefit durations and how consumer protection laws influence claim administration practices.

For now, the takeaway is clear. Even small adjustments in benefit duration can carry big consequences when policy language, customer experience and claims processes collide.