Progressive Direct “Projected Sold Adjustments” to ACVs Delaware Class Action

When a vehicle is totaled, the insurer must calculate its actual cash value (ACV) to determine the appropriate payout to the policyholder. But the complaint for this class action alleges that Progressive Direct Insurance Company “systematically thumbs the scale” in its favor by applying a “Projected Sold Adjustment” to lower its payouts in Delaware.

The class for this action is all Delaware 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, based on a valuation report prepared by Mitchell, where the ACV of the vehicle was decreased by applying a Projected Sold Adjustment to the prices of comparable vehicles used to determine the ACV.

Jasmyn Williams, who is the plaintiff in this case, insured her vehicle with Progressive Direct. It was involved in an accident sometime around October 30, 2020, and Progressive Direct declared it a total loss.

The complaint alleges that Progressive Direct uses a third-party vendor Mitchell International, Inc. to provide valuation reports to determine the ACV of a totaled vehicle. 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 that “reduce[s] the value of the total loss vehicles and the claim payment to the insured/claimant.”

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 it is applied to “reflect consumer purchasing behavior (negotiating a different price than the listed price).”

In this case, Mitchell’s report showed three comparable vehicles, to each of which it applied a projected sold adjustment, which the complaint cites as $516, $459, and $489, respectively.

According to the complaint, Progressive Direct does not provide any specific data to support these amounts. The complaint alleges that each adjustment “do[es] not reflect market realities … and run[s] 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 Direct] 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