Progressive Settles Class Action Suit over Total Loss Vehicle ClaimsProgressive Settles Class Action Suit over Total Loss Vehicle Claims Progressive Insurance has agreed to pay $48 million to settle a class action lawsuit filed by 93,000 New York policyholders who alleged they were underpaid on their total loss claims. The settlement represents approximately 54% of the plaintiffs’ claimed damages, plus pre-judgment interest. The plaintiffs alleged that Progressive used third-party software that improperly applied an adjustment, known as the projected sold adjustment (PSA), to their loss claims. This adjustment resulted in an underpayment of approximately 6.5%, according to the plaintiffs. They claimed that this violated their auto insurance policies and New York’s General Business Law. Progressive maintains that it did not engage in any wrongdoing and complied with all insurance laws. However, the company agreed to settle the case without admitting liability. The settlement amount will be distributed to policyholders who filed claims since July 28, 2015, after deducting attorneys’ fees and administrative costs. Individual payments are expected to average approximately $335. The lawsuit was filed in July 2021 and certified as a class action in March 2023. The parties entered into mediation in June 2024, less than a month before trial. The proposed settlement was filed on July 1. If approved by the court, the settlement will resolve all claims in the lawsuit. A preliminary hearing is scheduled for August 14. Tags: * New York * Profit and Loss Claims * Personal Auto
Progressive Insurance has agreed to a $48 million settlement with 93,000 New York policyholders who claim the insurer underpaid their total loss claims on their vehicles.
The $48 million represents approximately 54 percent of the plaintiffs’ claimed damages plus pre-judgment interest. The settlement includes New York executives who filed claims since July 28, 2015. After paying attorneys’ fees and administrative costs, the amount to be distributed is approximately $31.3 million, resulting in individual payments averaging approximately $335.
The plaintiffs allege that the third-party software Progressive uses — Mitchell International, Inc.’s WorkCenter Total Loss — improperly applies an adjustment called the projected sold adjustment (PSA) when processing total loss claims. By using the Mitchell valuation reports and applying the PSA, Progressive “systematically distorts” when calculating the actual cash value of the plaintiffs’ loss vehicles, the plaintiffs’ complaint alleges.
The plaintiffs allege that the PSA results in an underpayment of 6.5%. They allege that this underpayment represents a violation of New York’s auto insurance policies and a violation of the state’s General Business Law.
Mitchell’s reports explain that the downward adjustment is intended to “reflect consumer purchasing behavior” when negotiating a price other than the stated price.
Although Progressive has agreed to a settlement, it continues to deny any wrongdoing and maintains that it complied with all auto insurance policies and all insurance laws. It contended that the Mitchell software was approved by the state insurance department.
Lead plaintiffs Dominick Volino and John Plotts fled their proposed class action in July 2021. On March 16, 2023, U.S. District Judge Lorna Schofield certified two classes of litigation: a breach of contract class and a general business law class. On June 11, 2024, with less than a month before trial, the parties entered into mediation. The proposed settlement was filed on July 1.
In asking the judge to approve the agreement, attorney Hank Bates called the proposal “an excellent outcome and in the best interests” of the classes.
Judge Schofield has scheduled a preliminary hearing for August 14.
subjects
New York Profit and Loss Claims Personal Auto
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