ALBANY, N.Y. — Last week, Fuccillo Automotive Group agreed to pay $1.6 million to settle a 2009 class action lawsuit that alleged insurance fraud. The lawsuit charged that Fuccillo Hyundai in Upstate New York illegally sold insurance without a license to customers under the guise of an anti-theft warranty.

Each of the 5,320 victims will receive settlements of $160, with the lead representative in the case, Heidi Seekamp, awarded $10,000.

The original lawsuit brought by Seekamp claimed that Fuccillo Hyundai sold a 2007 Hyundai Elantra with an Auto Theft Security Discount Guarantee for $295. The guarantee involved the etching of a VIN number into the vehicle’s windows, which the dealership said would serve a theft deterrent.

The security package — administered by Universal Automotive Services — came with a guarantee that if a car was declared a total loss due to theft, Fuccillo Hyundai would provide the owner with a 10% discount toward the purchase of a replacement vehicle, or $2,000.

Seekamp alleged in her lawsuit that what was represented as a theft warranty was actually an insurance policy, and because Fuccillo and Universal are not licensed insurance companies, brokers or agents in New York, it was an illegal act.

Seekamp also alleged that because the VIN numbers were etched into windows prior to sale, and that the dealer failed to submit its Auto Theft Security Discount to the New York State Insurance Department for approval, they were guilty of engaging in deceptive consumer practices and conspiracy to commit consumer fraud.

In its defense, Fuccillo pointed to cases in New Jersey and Pennsylvania where courts ruled that similar products were not deemed insurance policies and were upheld as theft deterrents and warranties. The New York Insurance Department, however, agreed with the plaintiff’s assertion that this particular program fell under the definition of an insurance contract.

The New York Insurance Department defines an insurance contract as any agreement or transaction where one party is obligated to give a monetary benefit upon the occurrence of “a fortuitous event.” And according to the insurance agency, the product’s warranty benefit being triggered by theft constituted a fortuitous event, making it an insurance policy by its definition.