Say It Isn’t So, Flo: Lawsuit Alleges Progressive Underpays

Two New Yorkers filed suit against Progressive Corp. on July 22, alleging the car insurer is underpaying and arbitrarily undervaluing claims by New York policyholders for totaled vehicles by deceptively adjusting the claims process.

Plaintiffs Dominick Volino of Duchess County and John Plotts of Wayne County said “the insurer’s practice to determine a vehicle’s value after a total loss shorts policyholders on what they are actually owed for their lost property.”

“When valuing total loss claims for vehicles, it is improper for an automobile insurance company, such as Progressive, to undervalue and underpay the claims by manipulating the data used to determine the actual cash value of the vehicles,” the drivers said.

According to the suit filed in New York on July 22, the practice is contrary to appraisal standards and violates New York law.

“Progressive systemically thumbs the scale when calculating the actual cash value of claimants’ loss vehicles by applying so-called ‘Projected Sold Adjustments’ that are: (a) deceptive and unexplained; (b) contrary to appraisal standards and methodologies; (c) not based in fact, as they are contrary to the used car industry’s market pricing and inventory management practices; (d) not applied by the major competitor of Progressive’s vendor Mitchell; and (e) on information and belief, not applied by Progressive and Mitchell to insureds in other states like California,” reads the complaint.

Volino and Plotts estimate that more than 100 putative class members exist, and the aggregate compensatory damages claimed by them and the class are estimated at more than $5,000,000.

Volino’s Nautic blue metallic 2004 Volvo was declared a total loss after a car accident in January 2021. Plotts’ Phantom-black tri-coat Pearl 2013 Chrysler was declared a total loss by Progressive after a car accident in September 2020. According to the New Yorkers, Progressive promised to pay them actual cash value to buy replacements.

Mitchell International Inc. vehicle valuation reports were used by Progressive during the settlement process, according to the suit. Similar vehicles were compared with Volino’s and Plotts’ totaled vehicles to determine values, however, “comparisons against similar cars that were sold in the month the original vehicle was totaled unfairly cuts into the drivers’ payouts because it incorporates consumer behavior, such as negotiating a lower price,” the lawsuit states.

The adjustments by Progressive resulted in a “significant” reduction of base values on vehicles comparable to Volino’s and Plotts’, which lowered the payout of the claims.

The lawsuit alleges that Volino was underpaid by $585, and Plotts’ claim could have been $800 more without the Progressive adjustment.

“Were it not for this deceptive and improper adjustment, the ‘base value’ in each valuation report would have been higher, resulting in a higher ‘settlement value’ and in turn a higher payment by Progressive for actual cash value,” the lawsuit states.

The lawsuit states “In truth, Progressive’s Projected Sold Adjustments do not reflect market realities (the context in which “consumer behavior” occurs) and run contrary to customary automobile dealer practices and inventory management, where list prices are priced to market to reflect the intense competition in the context of internet pricing and comparison shopping. A negotiated price discount would be highly atypical and therefore is not proper to include in determining actual cash value.

The plaintiffs allege that 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 Progressive assumes always exists without any explanation or support.”

The suit also alleges that Progressive does not explain nor provide data to support downward adjustment to affected policyholders, including Volino and Plotts. A disclosure on the final page of valuation reports is the only statement by Progressive on the adjustment.

Volino and Plotts seek approval of the class action suit and damages awarded to policyholders within the class, and also ask the court to order Progressive to stop using projected sold adjustment to determine actual cash value of total loss vehicles. They also demand a trial by jury.

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1 Response to Say It Isn’t So, Flo: Lawsuit Alleges Progressive Underpays

  1. I’m surprised the underpayments were so low! Generally speaking, many insurers try to lowball the Actual Cash Replacement Value price by as much as $1200 to $2400.00 and I have seen greater underpayments.

    It’s good to see a couple bravehearts take on the insurance giant and hold them accountable for their less than equitable settlement practices which appear to be escalating.

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