Four subsidiaries of Progressive Corp. have reached a nearly $14 million settlement in a class action lawsuit alleging they underpaid total loss vehicle claims in New York by using a disputed valuation method.
Filed in 2021, the lawsuit accused Progressive of applying a “Projected Sold Adjustment” (PSA) to reduce the base value of comparable vehicles used to calculate the actual cash value (ACV) of totaled vehicles. The plaintiffs claimed the PSA was deceptive, unexplained and inconsistent with accepted appraisal standards and industry practices.
According to the complaint, the PSA adjustment was layered on top of typical valuation modifications for vehicle condition, mileage, trim and options, ultimately lowering payouts to claimants. The only reference to the PSA in valuation reports, the suit claimed, was a vague note stating the reduction was to “reflect consumer purchasing behavior (negotiating a different price than the listed price).”
The plaintiffs argued that Progressive’s use of PSA “thumbs the scale” against consumers and is not commonly applied by Mitchell’s major competitors or used by Progressive in other states.
In its defense, Progressive asserted the New York Superintendent of Insurance had approved the Mitchell software it uses for valuations, including the PSA. “No plaintiff alleges that any defendant engaged in purportedly deceptive conduct outside of their purported failure to pay actual cash value under the terms of their policies,” the company wrote in the motion to dismiss it filed in November 2021.
The settlement, which does not imply any admission of wrongdoing by either party, includes nearly $13.5 million in attorney fees and an additional $343,000 for litigation and resolution expenses. Seven named plaintiffs will receive $3,000 each, plus reimbursement for documented lost wages or out of pocket costs, totaling $28,300.
