Progressive Insurance Agrees to $48M Settlement with NY Policyholders

Progressive Insurance reached a $48 million settlement with a class of 93,000 New York policyholders who alleged the insurer underpaid their total loss claims. This settlement represents approximately 54% of the compensatory damages claimed by the plaintiffs, plus pre-judgment interest.
The settlement covers New York drivers who have filed claims since July 28, 2015. After accounting for attorneys’ fees and administrative expenses, the amount to be distributed is approximately $31.3 million, yielding individual payments of about $335 on average.
The plaintiffs alleged the third-party software used by Progressive — Mitchell International Inc.’s WorkCenter Total Loss — applies an improper adjustment called the projected sold adjustment (PSA) in settling total-loss claims. By using the Mitchell valuation reports and applying the PSA, Progressive “systemically thumbs the scale” when calculating the actual cash value of claimants’ loss vehicles, according to the plaintiffs’ complaint.
The PSA allegedly results in a 6.5% underpayment. The plaintiffs maintain this underpayment represents a breach of New York automobile insurance policies and a violation of the state’s General Business Law. Language in Mitchell’s reports explains the downward adjustment is meant to “reflect consumer purchasing behavior” in negotiating a different price than the listed price.
Despite agreeing to the settlement, Progressive denied any wrongdoing and insisted it has complied with all auto insurance policies and laws. The company argued the Mitchell software was approved by the state’s insurance department.
Lead plaintiffs Dominick Volino and John Plotts filed their proposed class action in July 2021. On March 16, 2023, U.S. District Judge Lorna Schofield certified two litigation classes: a breach of contract class and a General Business Law class. Mediation between the parties began June 11, with the proposed settlement filed July 1.
In urging the judge to approve the agreement, plaintiff attorney Hank Bates called the proposal “an excellent result and in the best interest” of the classes. Schofield set a preliminary approval hearing for Aug. 14.