Progressive Direct “Projected Sold Adjustments” Oklahoma Class Action

Progressive Direct Insurance Company uses a third-party vendor, Mitchell International, Inc., to help it determine the actual cash value (ACV) of vehicles that are totaled. But the complaint for this class action alleges that Progressive “systematically thumbs the scale” by applying Projected Sold Adjustments to the valuations of the vehicles, in order to reduce the amounts of its payouts to insureds.

The class for this action is all Oklahoma citizens insured by Progressive who, from the earliest time allowable through the date the class certification order is entered in this case, received compensation for the total loss of a covered vehicle, where the compensation was based on a vehicle valuation report prepared by Mitchell and the ACV was decreased by Projected Sold Adjustments applied to the prices of the comparable vehicles used to determine the ACV.

To prepare vehicle valuation reports, Mitchell finds comparable vehicles in the totaled vehicle’s geographic area, then adjusts their prices based on things like mileage, options, and equipment. Then, Progressive has Mitchell apply a Projected Sold Adjustment that the complaint alleges “results in a significant downward adjustment to the base values of the comparable vehicles used to calculate the ACV of” the totaled vehicle.

The only explanation given of this adjustment, the complaint claims, is a statement on the valuation report’s last page saying that it is applied to “reflect consumer purchasing behavior (negotiating a different price than the listed price).” But the complaint alleges that this Projected Sold Adjustment is arbitrary, not based on real data, and “contrary to the used car industry’s market pricing and inventory management practices[.]”

The plaintiff in this case, James Cooley, totaled his vehicle on September 10, 2019. He made a claim to Progressive, which had Mitchell prepare a valuation report.

Mitchell came up with four comparable vehicles, the complaint claims, to which it applied Projected Sold Adjustments of approximately 7.2% of the value of each.

“To arrive at the Projected Sold Adjustment amount,” the complaint alleges, “Progressive … categorically excludes transactions that undermine its flawed thesis: for example, transactions where the sold price exceeds list price, transactions from dealerships who market themselves as ‘no-haggle’ dealerships, and every transaction where the sold price equaled the advertised price.”

According to the complaint, “the used auto market is such that, given the ubiquity of Internet advertising and shopping and developments in sophisticated pricing software, car dealerships simply do not negotiate off of Internet-advertised prices.”

Although sometimes a sales price does differ from a list price, the complaint says, the difference “does not reflect a negotiation of the vehicle’s cash value, but rather that a dealer shifted its profits to other components of the transaction: for example, profits made through financing or trade-in or ancillary products…, or that the dealer applied a generally unavailable discount to the cash value of the vehicle (such as an employee discount, loyalty discount, military discount, or friends/family discount).”

Article Type: Lawsuit
Topic: Insurance
Tags: Auto Insurance, Incomplete payment of benefits due, Insurance, Projected Sold Adjustment