Progressive to Pay $48 Million in Car Undervaluation Lawsuit

Progessive Class Action Lawsuit Settlement

Progressive reached a $48 million settlement in a class action lawsuit filed by New York drivers who accused the insurer of undervaluing their totaled vehicles. The settlement will provide about 93,000 policyholders with $335 each.

• Consumers Affected: New York drivers who had their vehicles declared a total loss by Progressive between July 2015 and the present.
  
  
• Reason for Settlement: Allegations that Progressive systematically undervalued total loss vehicles, leading to inadequate compensation for policyholders.
  
  
• Settlement Amount: $48 million, with individual payouts estimated at $335 per eligible claimant.
  
  
• Where: The class action lawsuit was filed and settled in a New York federal court.

Progressive Casualty Insurance Co., the second-largest auto insurer in the nation, has agreed to a $48 million settlement to resolve a years-long class action lawsuit filed by New York drivers. The complaint, filed in July 2015, accused Progressive of systematically undervaluing their totaled vehicles, resulting in lower payouts for policyholders.

Progressive Class Action Claims Inflated Valuations on Totaled Cars

In Volino et al v. Progressive Casualty Insurance Co et al, the plaintiffs called out Progressive's use of "projected sold adjustments" in calculating a car's actual cash value.  According to the plaintiffs, Progressive relied on a system that factored in the difference between a car's listed price and the price it was ultimately sold for. This method, they claimed, could potentially undervalue the car's true market worth.

Attorneys representing nearly 93,000 New York policyholders who held auto insurance with Progressive between July 28th, 2015 and the present argued that this practice was unfair and inaccurate. They alleged that Progressive's methodology failed to reflect the current market where readily available online car pricing information has diminished the role of negotiation tactics traditionally used in car sales.

The lawsuit contended that Progressive's use of this method violated industry standards and New York's general business law.  While Progressive has not admitted any wrongdoing, they have agreed to settle the lawsuit for $48 million.

Nearly 100,000 New Yorkers to Receive Automatic Payments

The proposed settlement, awaiting approval by U.S. District Judge Lorna Schofield, would see all 93,000 affected policyholders automatically receive $335 each. This payout stems from allegations that some policyholders saw their car's value decrease by as much as 6.5% due to Progressive's valuation methods. In some cases, the lawsuit documented individual losses exceeding $800.

"Progressive’s Projected Sold Adjustments are contrary to appraisal standards," the complaint read. "There are multiple generally recognized and acceptable methodologies for determining actual cash value, including the use of comparable vehicles. Progressive begins the process of valuing loss vehicles using comparative methodology but improperly deviates from that process by thumbing the scales in favor of itself."

A preliminary hearing to determine the final settlement is scheduled for August 14th.  In addition to the payouts for policyholders, attorneys representing them may seek up to $16 million in legal fees from Progressive.

Progressive Faces Similar Suit in California

This settlement mirrors a class action lawsuit filed against Progressive in California earlier this year. KRON 4 reported on the case, stating the lawsuit alleged Progressive owed "duties of good faith and fair dealing to hundreds of thousands of California residents and businesses annually."