Progressive Insurance Total Loss Payments Result in Class Action Lawsuit

Two New York residents have filed a class action lawsuit against Progressive, claiming the insurance provider undervalues the the price for totaled vehicles to avoid paying full price to vehicle owners.

The complaint (PDF) was filed by Dominick Volino and John Plotts late last month in the United States District Court Southern District of New York, alleging Progressive uses deceptive methods to set a total loss payout amount for vehicles after an accident. Plaintiffs allege the actions are unethical and designed to under-appraise the wrecked vehicle, resulting in lower payments to customers under insurance policies.

The lawsuit was filed after both plaintiffs’ vehicles were declared a total loss following a car accident, and Progressive Corporation was required to pay the vehicle owners actual cash value to purchase replacements.

Volino alleges he was underpaid by $585, and Plotts’ claim could have been $800 more without Progressive using their “Projected Sold Adjustment”. However, with large numbers of other total loss payments issued by Progressive allegedly undervaluing cars, plaintiffs seek class action status for the lawsuit.

Progressive uses a third-party vehicle service provided by Mitchell International to establish a price on vehicles deemed a total loss, according to the class action lawsuit. Plaintiff’s claim Progressive’s third-party service uses a “Projected Sold Adjustment” pricing method, which establishes an unfair price for the vehicle reimbursement to owners.

The complaint indicates competitors of Mitchell International use actual list prices of comparable vehicle models when establishing a payout price to vehicle owners whose vehicles have been deemed a total loss, ultimately paying the vehicle owner more money for their totaled vehicle.

Volino and Plotts further allege Progressive arbitrarily uses the Project Sold Adjustment pricing method in New York only, while providing no explanation for why this same “unfair” calculation is not used across the rest of the country.

New York prohibits insurers from being sued directly for unfair claims practices. However, the lawsuit presents alternative causes of action against Progressive, which include Violation of New York General Business Law, which does allow a private right of action, and breach of contract.

Plaintiffs estimated more than 100 other class members exist, and claimed damages exceed $5,000,000. In addition to class action status approval and damages, plaintiffs are also asking the court to stop Progressive from using the projected sold adjustment method to cheat policyholders out of the rightful value of their total loss payouts.