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

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

The class for this action is all Massachusetts 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 Projected Sold Adjustments to the prices of the comparable vehicles.

Plaintiff Hayley Martorana, a Massachusetts resident, insured her vehicle with Progressive Direct. On June 12, 2020, it was in an accident. The insurance company declared it a total loss.

Progressive Direct uses 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, 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 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 eleven comparable vehicles, to each of which it applied a projected sold adjustment, ten of which the complaint cites as $749, $629, $664, $643, $679, $679, $742, $639, $635, and $687, respectively.

According to the complaint, Progressive Direct 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 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