Progressive Car Insurance Total Loss Valuation Class Action

When an insurance company calculates a total loss payout on a vehicle, how do they make the calculation? According to the complaint for this class action, Progressive Corporation uses a system licensed by Mitchell International that uses questionable means to figure the value, resulting in a lower valuation and a lower payout.

The class for this action is all insureds under Progressive’s Texas Auto Policy whose vehicles were declared total losses by Progressive and were valued using Mitchell’s WCTL system.

On September 6, 2016, plaintiff Blaise Williams bought a 2016 GMC Yukon for $48,050 and took out an automotive insurance policy on it with Progressive. Less than a year later, in August of 2017, the Yukon was damaged in Hurricane Harvey, and Progressive declared it a total loss.

Some days later, Progressive informed Williams that the valuation of the Yukon was $38,109.27 and offered to settle for $40,341.34, with deductible, taxes, and fees included. When Williams questioned the valuation, Progressive made a final offer of $39, 775.92 actual cash value, for a total of $42,112.17, with deductible, taxes, and fees included.

However, the complaint alleges that the actual cash value of the Yukon, based on market value, age, and condition, was $44,025.

Until 2010, the complaint alleges, Progressive determined the actual cash value of total losses using the National Automobile Dealers Association (NADA) Guidebook, but in 2010 it switched to a Mitchell’s Work Center Total Loss (WCTL), which uses a different methodology.

WCTL claims to provide valuations based on purportedly comparable vehicle information and objective loss vehicle data provided by Progressive inspectors, such as the vehicle’s VIN number. But according to the complaint, “comparable” vehicles in Mitchell’s system may be in a variety of conditions and the system does not take condition into account in determining value.

Instead, the complaint claims, it assigns a value between 1 and 5 to reflect the condition of each of thirteen characteristics, such as Interior, Exterior, Mechanical, and Tire. The system then locates vehicles comparable to the loss vehicle by searching vehicles offered for sale by dealers located as close as possible to the loss vehicle’s zip code. However, the system has no similar evaluation of the condition of comparable vehicles.

In fact, a Mitchell marketing presentation claimed that the average market value under its system was $6,780 as opposed to $7,680 under NADA. According to the complaint, the WCTL system artificially deflates the value of total loss vehicles, which it claims is a breach of contract and a violation of the Texas Insurance Code, among other charges.

Article Type: Lawsuit
Topic: Consumer
Tags: Auto Insurance, Deceptive Insurance Practices, Incomplete payment of benefits due