Drive New Jersey, Progressive Garden State Skimped Insureds on Actual Cash Value Payments, Class Action Claims

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A proposed class action alleges Drive New Jersey Insurance Company and Progressive Garden State Insurance Company have shirked their promise to pay insureds the actual cash value of a total-loss vehicle with the help of certain cost “comparisons” made by a third-party vendor. 

The 27-page lawsuit alleges Drive New Jersey and Progressive Garden State have, more specifically, directed a third-party vendor to systematically reduce total loss evaluations for vehicles declared unsalvageable after an accident. To do this, the vendor, the suit says, determines the actual cash value (ACV) of an insured total-loss vehicle by comparing the for-sale price of “comparable vehicles” in the relevant market. After the vendor determines the prices of comparable vehicles, however, Drive New Jersey and Progressive Garden State instruct the third party to apply an arbitrary and baseless “projected sold adjustment” reduction to the price of each vehicle, the lawsuit alleges.

The effect of this, according to the complaint, is that the vendor artificially reduces the ACV of a consumer’s total-loss vehicle, and consequently reduces the amount the insurance companies will pay to a customer. 

“As a result of Defendants’ deceptive, fraudulent, and unfair scheme, Plaintiffs did not receive the benefit of the bargain, and thus sustained actual damages,” the case alleges. 

In the event a vehicle is declared a total loss due to repairs being impossible or uneconomical, Drive New Jersey and Progressive Garden State, under their uniform insurance policies, are to pay for the loss to the extent of a covered vehicle’s actual cash value, the suit begins. When valuing total-loss auto claims, insurers such as the defendants utilize third-party companies to suss out a vehicle’s “market value,” which serves as the baseline number for the total loss payment to be made to a customer, according to the complaint. 

The lawsuit alleges that the defendants, however, attempt to reduce the total-loss payments owed to insureds through a deceptive “projected sold adjustment,” which serves to artificially decrease a vehicle’s market value. The third-party valuation vendor, who the lawsuit says is a company called Mitchell, uses a vehicle valuation system with which it identifies the list price of comparable vehicles sold or listed for sale online, the case says. Mitchell then, at the defendants’ instruction, applies the “projected sold adjustment” to a covered total-loss vehicle, purportedly to reflect “some sort of average difference between a dealer list price and ‘what the dealer would be willing’ to sell it for,” per the suit.

“Upon information and belief, Defendants’ ‘projected sold adjustment’ is a blanket percentage reduction of the selling price of a comparable vehicle based on the listing price,” the lawsuit says. “Rather than basing their adjustment on any tangible features of the available vehicle which may relate to consumer negotiations, the ‘projected sold adjustment’ is arbitrarily applied as a universal percentage reduction to any vehicle in a given price range.”

For example, the case says, if a car is listed for sale at $10,000, the vehicle’s value could easily be reduced by seven percent. If an identical vehicle of the same make, model year and trim was listed at $15,000, the complaint continues, the vehicle’s value might be reduced by 10 percent, regardless of the fact that each vehicle shares the same make, model, year and features. 

“There is no rational explanation for why the two identical vehicles would be subject to such varied reductions in their selling price,” the suit contests.

The lawsuit looks to represent all New Jersey residents insured by Drive New Jersey Insurance Company or Progressive Garden State Insurance Company who, from the earliest allowable time through the date of class certification, received a first-party total loss valuation and payment on an automobile total loss claim that deducted a “projected sold adjustment” or similar adjustment. 

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