The two firms, Alekman DiTusa LLC and Connor, Morneau and Olin LLC, filed suit against Progressive Direct Insurance Company, claiming that between 2008 and 2010, the insurance company deceptively had customers agree to an $8,000 deductible for injury claims resulting from car accidents.
Ryan Alekman said the settlement, agreed to January 29, brings to an end a four-year dispute affecting 4,311 people in Massachusetts.
Each of the people listed in the suit, named "Wanda Estrada, et al v. Progressive Direct Insurance Company," is eligible for a payment of $1,875 provided they filed by the end of last month. If all of the claims are filed, the payout by Progressive will be $8.08 million.
In addition to the money for claims, Progressive also agreed to pay all legal fees.
According to court documents, the company agreed to the settlement to bring an end to the court action but admitted to no wrongdoing. A spokesman for Progressive Direct Insurance could not be reached for comment.
The 4,311 class action members were all people who purchased Progressive Insurance between 2008 and 2010 and who submitted an injury claim as a result of an accident but had it denied.
Each has already received written notification they are eligible for a share of the payment, but each needs to file a claim by Feb. 28 through the website https://masspipclaims.com.
The suit involved a dispute over a portion of car insurance policies known as personal injury protection, or PIP, coverage. Under Massachusetts law, all auto insurance policies are required to provide PIP coverage to the licensed driver of the car and all occupants.
It covers the driver and all occupants for medical costs, lost wages and even funeral expenses related to injuries suffered in a car accident.
The suit contended that Progressive had affixed an $8,000 deductible to many policies for many PIP claims. That is, if someone filed a claim for a medical expense related to an auto accident, Progressive would make payment only after the claimant paid the first $8,000.
"When ... the average consumer online (buys) this fairly complex product, you are going to run into problems."
Alekman said anyone in Massachusetts purchasing auto insurance online from Progressive between 2008 and 2010 would be asked if they had separate health insurance. Since Massachusetts had had already begun requiring health insurance for residents, most people would click yes.
But doing so would automatically change the policy to include the $8,000 deductible.
"It was then up to the applicants to know this and change it back," Alekman said.
Someone clicking "no" would be getting a policy with no deductible for PIP claims.
"I've never seen an insurance policy with an $8,000 PIP deductible until Progressive started doing business in Massachusetts," DiTusa said.
The deductible was included only between 2008 and 2010. Policies since then have not had it included, he said.
According to court documents, the lead plaintiffs, Wanda and Walter Estrada, of Holyoke, purchased insurance online through Progressive on Aug. 3, 2009. They were in an accident four days later, and both Estradas and their two children were injured.
Each incurred medical bills of between $3,000 and $7,400, but when they filed claims with Progressive, they were denied because of the $8,000 deductible.
DiTusa said that at the heart of the issue is purchasing insurance online instead of through a face-to-face discussion with an insurance agent. "Insurance is a fairly complicated product. When you start getting the average consumer online buying this fairly complex product, you are going to run into problems," DiTusa said.
"It totally created a problem for a lot of people because a lot of people bought their policies online," Alekman said.
Thank you to The Republican for reprint permission.