Progressive Sued Over Alleged Reductions to Total Loss Payments in New York

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A proposed class action alleges Progressive Casualty Insurance Company and Progressive Max Insurance Company have artificially reduced the amounts paid to total loss claimants in New York by applying a blanket reduction to the value of comparable vehicles.

According to the 23-page lawsuit, Progressive has “systematically thumb[ed] the scale” against consumers by instructing its valuation vendor, Mitchell International, to apply what it calls a “projected sold adjustment” to the values of comparable vehicles that are used to determine a totaled vehicle’s actual cash value. In this way, Progressive “undervalue[s] and underpay[s]” total loss claims by manipulating the data used to determine how much each claimant will receive, the suit attests.

The case alleges that the defendants’ “arbitrary deductions” to the sale prices of comparable vehicles are based on “antiquated and erroneous assumptions” and violate New York insurance law.

The lawsuit explains that when Progressive determines that an insured vehicle is a “total loss,” meaning it is impossible or uneconomical to repair damage to the car, the company is contractually obligated to pay the policyholder the vehicle’s actual cash value as determined from the values of comparable vehicles in the relevant market. Per the suit, Progressive manipulates this data by having Mitchell, who prepares valuation reports based on market data, apply a “projected sold adjustment” to the base values of comparable vehicles that were recently sold or listed for sale in the claimant’s geographic location.

According to the case, these blanket downward adjustments are “deceptive and unexplained” and do not line up with the used car industry’s sales practices. The lawsuit says that the only explanation offered by Progressive for the projected sold adjustment is a “general, nondescript statement” on the last page of the valuation report that purports that the adjustment “reflect[s] consumer purchasing behavior (negotiating a different price than the listed price).”

According to the suit, the defendants have failed to provide any data supporting the projected sold adjustments in general or the specific amounts by which comparable vehicles’ values are reduced. The case alleges that the adjustments, contrary to Progressive’s “speculation[s]” about consumer behavior, do not reflect market realities in the used car industry, where, according to the suit, “list prices are priced to market to reflect the intense competition in the context of internet pricing and comparison shopping.” Negotiating a used car price is “highly atypical,” and adjusting for such by applying a reduction to a vehicle’s sale price is therefore “improper,” the lawsuit argues.

According to the case, the “impropriety and arbitrariness” of Progressive’s projected sold adjustments is evidenced by the fact that Mitchell’s main competitor does not apply these adjustments to the cars it values and that Progressive itself does not apply them when evaluating claims in, say, California.

“There is no justification for applying these adjustments when valuing total losses in New York while not subjecting California claimants to the same negative adjustments,” the complaint argues.

The suit alleges that were it not for Progressive’s allegedly unlawful deductions, total loss claimants would be paid hundreds or thousands of dollars more for their totaled vehicles.

The lawsuit looks to cover New York residents who, from the earliest allowable time until the date the lawsuit is resolved, made a claim on an insurance policy issued by Progressive Casualty, both Progressive Casualty and Progressive Max, or both Progressive Casualty and any Progressive Group entity, and received compensation for the total loss of a covered vehicle where the compensation was based on a Mitchell valuation report and the actual cash value was decreased based on projected sold adjustments to the comparable vehicles used to the determine the car’s actual cash value.

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