Progressive Applies Unlawful Adjustments to Totaled Car Values, Class Action Alleges

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A proposed class action alleges Progressive Casualty Insurance Company underpays claims for total-loss vehicles by applying “arbitrary, baseless, and illegal” reductions to the cars’ values.

The 17-page case claims Progressive “skirts its straightforward contractual obligation” to pay the actual cash value of a vehicle determined to be a total loss after accidental damage by instructing its third-party valuation vendor to apply a “projected sold adjustment” to the value of comparable vehicles. Thus, Progressive artificially lowers the market value of the comparable cars and pays insureds less than they are entitled to under their policies and New York law, the lawsuit attests.

“Defendant’s deceptive, fraudulent, and unfair scheme violates the New York General Business Law § 349, et seq., and constitutes a breach of contract and breach of the covenant of good faith and fair dealing,” the complaint alleges.

Progressive promises in its auto insurance policies to pay for the loss of a vehicle, limited to the actual cash value, in the event the car is declared a “total loss,” i.e., when repair is “impossible or uneconomical,” the lawsuit explains. To determine a car’s actual cash value, Progressive uses the “market value” of comparable vehicles as determined through third-party vendor Mitchell’s Vehicle Valuation Report, the case relays. Per the suit, Mitchell identifies the list price of comparable vehicles recently sold or listed online and then, at Progressive’s directive, applies an across-the-board “projected sold adjustment” to the comparable cars’ values.

The lawsuit argues that the “projected sold adjustment,” which purports to be “some sort of average difference between a dealer list price and ‘what the dealer would be willing’ to sell it for,” is arbitrary and does not reflect market realities. According to the case, Progressive instructs Mitchell to apply the reduction without contacting the dealers to find out if they ever discount their vehicles. Moreover, the suit claims the defendant failed to account for the fact that most dealerships have moved away from price negotiation in favor of “no haggle” pricing and, even for those who do negotiate prices, do not reduce the list price for online sales.

“By applying an arbitrary and unsupported ‘projected sold adjustment’ to every comparable vehicle, Defendant fails to provide documentation to ensure statistically valid local market area values in clear violation of [New York law],” the complaint charges.

The case asserts that Progressive’s reductions, even if accepted at face value, cannot possibly reflect market values given they are based on national, and not market, data.

The lawsuit looks to cover New York residents insured by Progressive who, “from the earliest allowable time through the date of a class certification order,” received a first-party total loss valuation and payment on an automobile total loss claim that included a “projected sold adjustment” or similar adjustment.

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