Progressive responded to the suit by claiming the New York Superintendent of Insurance had approved the insurer’s use of Mitchell’s services. (Credit: Ken Wolter/Shutterstock)
Four Progressive subsidiaries have agreed to pay a $13.8 million settlement in a New York class action suit accusing them of undervaluing total loss vehicle claims. The defendants include Progressive Casualty Company, Progressive Advanced Insurance Company, Progressive Max Insurance Company and Progressive Specialty Insurance.
The original suit was filed in the Southern District of New York in October 2021. It alleges that the insurers determined the actual cash value of totaled vehicle claims using reports prepared by Mitchell International, Inc. Mitchell’s valuations allegedly included a “projected sold adjustment” deduction, which is described as an adjustment based on consumer purchasing behavior, which includes those who negotiate a different price than that at which the vehicle is listed.
The suit explains: “These valuation reports purport to contain values for comparable vehicles recently sold or for sale in the claimant’s geographic area. The reports also contain a purported valuation for the loss vehicle based upon advertisements for comparable vehicles listed in the report. The report then adjusts the advertised prices of those comparable vehicles to account for differences in equipment, mileage, and vehicle configuration.”
Plaintiffs claim this adjustment allowed Progressive to “thumb the scale” when calculating claim payouts. and the suit calls the use of the projected sold adjustment “deceptive” and contrary to appraisal standards.
“A negotiated price discount would be highly atypical and therefore is not proper to include in determining actual cash value,” the suit continues. “The inclusion of this significant downward adjustment purportedly to “reflect consumer purchasing behavior” is particularly improper in the context of this action—insureds who have suffered a total loss of their vehicle and need to procure a replacement and have limited time to search out the illusory opportunity to obtain the below-market deal Defendants assume always exists without any explanation or support.“
Progressive responded to the suit by claiming the New York Superintendent of Insurance had approved the insurer’s use of Mitchell’s services. They also defended the projected sold adjustment as a valid method of valuation.
In addition to a settlement of $13.5 million, Progressive has also agreed to pay $343,000 for attorney and litigation expenses. Each of the seven plaintiffs in the case are expected to receive $3,000 plus individual lost wages and other out-of-pocket expenses up to a combined $28,300.
A copy of the full class action lawsuit can be found here.
© 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.