Progressive Direct “Projected Sold Adjustment” to ACVs Minnesota Class Action

How should insurance companies figure a totaled vehicle’s actual cash value (ACV)? This class action takes issue with Progressive Direct Insurance Company’s “projected sold adjustment” which the company has subtracted from the prices of comparable vehicles to determine ACVs and its payouts to insureds. The complaint calls the adjustments “deceptive and unexplained” and “contrary to appraisal standards[.]”

The class for this action is all Minnesota citizens insured by Progressive Direct 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 where the compensation was based on a valuation report prepared by Mitchell and the ACV was decreased based on projected sold adjustments to the comparable vehicles used to determine the ACV.

The plaintiff in this case, Shonacie Grady, was involved in an accident in Minnesota on or around April 27, 2017. The vehicle was insured by Progressive Direct.

When Progressive Direct needs to figure the ACV of a totaled vehicle, it relies on Vehicle Valuation Reports from its 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, it applies something called a Projected Sold Adjustment.

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

In this case, Mitchell’s report showed ten comparable vehicles; Projected Sold Adjustments were applied to six of them, ranging from $753 to $896.

According to the complaint, Progressive Direct does not provide any data to support the amounts for the Projected Sold Adjustments. But 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 is therefore “not proper to include in determining actual cash value.” 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 Direct] assumes always exists…”

The complaint also claims that the projected sold adjustments are “contrary to appraisal standards.” It says that Mitchell’s main competitor for valuation reports, CCC Intelligent Solutions, does not subtract projected sold adjustments but uses list prices, and that Progressive Group insurance companies do not apply Projected Sold Adjustments in California.

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