N.Y. drivers seek class action against Progressive for systemically underpaying total loss claims

A proposed class action suit continues to be filed against the Progressive Corporation in Ny federal court accusing the insurer of underpaying total loss claims by making use of an arbitrary and deceptive valuation adjustment.

The suit claims that Progressive “systemically thumbs the scale” against claimants by making use of a so-called “Projected Sold Adjustment” that reduces the base values of the comparable vehicles used to calculate the actual cash worth of claimants' total loss vehicles. The negative price adjustment is applied on top of normal adjustments for differences such as trim level, mileage or options. Based on the suit, the only real reason behind this “Projected Sold Adjustment” appears on the last page from the valuation reports and is a “general, nondescript statement” claiming that the reduction is to “reflect consumer purchasing behavior .”

Plaintiffs Dominick Volino and John Plotts said Progressive declared their vehicles total losses and promised to pay them actual cash value to purchase replacements but that Progressive’s utilisation of the “Projected Sold Adjustment” led to a lesser payout. Volino claims the underpayment involved $585, and Plotts’ was underpaid by $802.

Progressive uses the vehicle valuation service supplied by Mitchell International. Based on the suit, the arbitrary nature of Progressive's Projected Sold Adjustment is demonstrated because Mitchell's primary competitor in providing valuation reports, CCC Intelligent Solutions, does not apply projected sold adjustments. Instead, CCC uses list prices.

The suit also claims that Progressive does not apply these adjustments when valuing total losses in California, and there is no justification for applying these adjustments in Ny whilst not subjecting California claimants towards the same negative adjustments.

In addition to seeking approval because of its class action and awarding damages, the suit asks the order from the court Progressive to stop using the projected sold adjustment in determining the ACV of total loss vehicles.

While the alleged behavior of Progressive may seem like an unfair claims settlement practice, Ny does not allow insurers to be sued directly for unfair claims practices; such treatments are left towards the Department of Insurance. Instead, this suit alleges that the insurer violated New York General Business Law § 349, a statute that does allow a private right of action and has been used by body shops previously to file suits against insurers.

GBL § 349 makes unlawful “deceptive acts or practices within the conduct of any business, trade or commerce,” and explicitly offers a personal right of action.

The case, Dominick Volino et al. v. Progressive Corp. was filed within the U.S. District Court for that Southern District of New York.