Two separate class action lawsuits were filed last week alleging Progressive used Mitchell International’s estimating software to systematically lower the actual cash value (ACV) of totaled vehicles, according to court documents. The lawsuits, using similar language, allege Progressive cheated the system when calculating the ACV of vehicles that were considered a total the loss by applying “Projected Sold Adjustments.” “Projected sold adjustments” are arbitrary, contrary to appraisal standards and methodologies, and not based in fact.
“Specifically, defendant, through Mitchell, systemically applies a so-called ‘Projected Sold Adjustment’ that results in a significant downward adjustment to the base values of the comparable vehicles used to calculate the ACV of plaintiff’s and class members’ total loss vehicles,” documents filed in both lawsuits say. “This reduction is contrary to the industry-standard comparable, or ‘comp. methodology for appraising ACV’ and is not based in fact, as it is contrary to the used car industry’s market pricing and inventory management practices. The adjustment is applied to each of the comparable vehicles on top of adjustments for differences such as mileage, options, and equipment. The only purported explanation for the downward adjustment appears on the last page of the valuation reports and is a general, nondescript statement claiming that the reduction ‘reflects the fact that consumers, typically, negotiate a purchase price less than the list price.’”
The suits argue that Progressive’s assertion that it is a “fact” that consumers “typically” negotiate down the list price of used autos is false. “To arrive at its (incorrect) conclusion that consumers negotiate down the list price used autos, Progressive, through its vendors, intentionally distorts the data, excludes transactions that undercut its false hypothesis, and ignores market realities, all for the purpose of applying a capricious and unjustified Projected Sold Adjustment to artificially deflate the value of total loss vehicles,” the suits say. Mitchell is not named as a defendant in the case. A similar lawsuit was filed by Alameda County District Attorney Pamela Price’s Consumer Justice Bureau in May against USAA and Progressive lists CCC Intelligent Solutions and Mitchell as defendants.
The California complaint alleges violations of California’s Insurance Code, Unfair Competition Law, and False Advertising Law. The DA’s Bureau seeks civil penalties, restitution for California consumers, injunctive relief, and associated fees and costs. According to the complaint, USAA uses CCC and Progressive uses Mitchell. The insurers and their affiliates allegedly use the software portals of both estimating systems to generate a market value report (MVR) that states a monetary value for the totaled vehicle, which is misrepresented as the ACV of the vehicle, and forms the basis of what the insurers tell policyholders they’re owed, according to the complaint. Progressive Marathon Insurance Co. recently settled two consolidated class action lawsuits in Michigan for $71.8 million. If you have dealt with Progressive or USAA on a total vehicle loss claim this may involve you.
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