Progressive Advanced “Projected Sold Adjustments” to ACVs Arizona Class Action

How are insurance companies permitted to calculate the actual cash value (ACV) of totaled vehicles to determine a payout? The complaint for this class action claims that Progressive Advanced Insurance Company unfairly reduces the amounts of its payouts to policyholders by subtracting a “Projected Sold Adjustment” from the values of comparable vehicles when it makes its calculations.

The class for this action is all Arizona citizens insured by Progressive Advanced Insurance Company who, from the earliest allowable time through the date the class is certified in this case, received compensation for the total loss of a covered vehicle based on a valuation report prepared by Mitchell, where the ACV of the vehicle was decreased by applying Projected Sold Adjustments to the prices of the comparable vehicles.

To calculate the ACV of a totaled vehicle, Progressive Advanced uses valuation reports prepared by third-party vendor Mitchell International, Inc.

Mitchell finds comparable vehicles in the geographic area and adjusts their prices based on differences in things like mileage, options, and equipment. After that, the complaint alleges, Progressive, acting through Mitchell, “systematically 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…”

The only explanation of this adjustment, the complaint claims, is a statement on the last page of the valuation report that says it is applied to “reflect consumer purchasing behavior (negotiating a different price than the listed price).”

The complaint alleges that this Projected Sold Adjustment is deceptive, contrary to appraisal standards, and not based in fact, because it “is contrary to the used car industry’s market pricing and inventory management practices.”

In this case, plaintiff Laura Rhodes was in an accident on September 2, 2021 that totaled her vehicle. Progressive Advanced got a vehicle valuation report from Mitchell that applied Projected Sold Adjustments for four of the five comparable vehicles it cited, in the amounts of $891, $1,054, $730, and $679, respectively.

Progressive Advanced did not give any data about the specific vehicles or anything else that might justify these reductions, the complaint alleges.

According to the complaint, Progressive Advanced does not provide any specific data to support these amounts. The complaint alleges that the adjustments “do not reflect market realities … and run contrary to customary automobile dealer practices and inventory management, where list prices are priced to reflect the intense competition in the context of internet pricing and comparison shopping.”

In fact, the complaint claims, a “negotiated price discount would be highly atypical” in the current market, and the Projected Sold Adjustment “therefore is not proper to include in determining ACV.” The complaint also points out that those who have lost their vehicles generally need to find new transportation immediately and do not have time to seek out “the illusory opportunity to obtain the below-market deal [Progressive Advanced] assumes always exists without any explanation or support.”

Article Type: Lawsuit
Topic: Insurance
Tags: Actual Cash Value, Auto Insurance, Incomplete payment of benefits due, Insurance