In California, District Attorney Pamela Price brought a similar case against Progressive, USAA and other insurance companies in April alleging similar violations of state law. (Credit: Piman Khrutmuang/Adobe Stock)
Progressive is facing class action lawsuits in both Kansas and Maryland for allegedly undervaluing the actual cash value of totaled vehicles.
Of course, claims that the auto insurance industry undervalues totaled cars are not new.
In California, District Attorney Pamela Price brought a similar case against Progressive, USAA and other insurance companies in April alleging similar violations of state law.
Further, The Hartford faced the same allegations brought in January in Connecticut state court.
The class actions, Williams v. Progressive Specialty Insurance and Shubkagel v. Progressive Direct Insurance, surfaced on Law.com Radar.
Progressive spokesperson Jeff Sibel did not respond to a request for comment.
According to the lawsuits, Mitchell International Inc., a third party that develops software for auto insurance companies to use for claims management, allegedly prepared each valuation report to determine the actual cash value of the totaled vehicles.
However, the plaintiffs claim Progressive uses the data to "systemically thumb the scale" to lower the value through methods that allegedly stray from appraisal standards and the used car industry's pricing and practices.
The plaintiffs argued that the defendant should not be "manipulating the data" and going against its duty to pay the actual cash value of a wrecked car.
"Notwithstanding these obligations and representations, defendant fails to fulfill this obligation by taking advantage of a valuation process that employs improper and unreasonable adjustments to reduce the value of comparable vehicles specified in the valuation reports, which in turn reduces the valuation of the total loss vehicles and the corresponding claim payment," the Williams complaint claimed.
While the recent class actions, filed on December 4 and 5, mention Mitchell International, neither names it as a defendant. The California case, People v. Progressive, however, names Mitchell and a similar software company, CCC Intelligent Solutions Inc., as defendants for allegedly purposefully designing their software for the insurance companies' desired outcome of underpaying total loss claims.
"Public safety includes protecting consumers from powerful companies that seek only to maximize profits,” Price said in a news release. “We are seeking to level the playing field for vehicle owners who face what looks like a rigged game when their car or truck is totaled because a loss of a vehicle can destabilize a person’s life.”
The proposed classes are comprised of Maryland and Kansas residents who received a claim payment that was reduced by a projected sold adjustment based on the valuation report from Mitchell. Both classes accused the defendant of breach of contract and breach of the covenant of good faith and fair dealing.
The Kansas class is represented by Derek P. Sieck of OnderLaw, and Cary Joshi of Bailey & Glasser is the attorney for the Maryland class. Neither attorney responded by press time.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.