Progressive Universal “Projected Sold Adjustments” to ACV Illinois Class Action

When an auto is totaled, the insurer must calculate the actual cash value (ACV) in order to make a payout to the insured. The complaint for this class action alleges that Progressive Universal Insurance Company “systematically thumbs the scale when calculating” this amount, because it applies “Projected Sold Adjustments” that are deceptive and unfair, and that do not reflect actual practice in the auto market.

The class for this action is all Illinois citizens insured by Progressive Universal Insurance Company who, from the earliest allowable time under the law through the date an order is entered for certification of the class 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 reduced because of Projected Sold Adjustments to the prices of comparable vehicles used to determine the ACV.

When Progressive Universal is calculating the ACV of a totaled vehicle it insured, the complaint alleges it uses valuation reports from a vendor called Mitchell International, Inc. The beginning of this process, the complaint alleges, is not at issue. Comparable vehicles are found for sale or recently sold in the claimant’s geographic area, and their prices are adjusted for differences in mileage, equipment, and configuration.

But then, another adjustment is made to the prices which the complaint alleges is unexplained, unsupported, and unfair: “the valuation reports used by [Progressive Universal] make a further adjustment to each loss vehicle called a ‘Projected Sold Adjustment.’” The adjustments applied to the three comparable vehicles in the report subtracted from their values the amounts of $818, $695, and $712, respectively, the complaint claims.

According to the complaint, the insured person is not given any data that might explain these amounts, nor any explanation supporting these types of adjustments at all. “Instead,” the only explanation is buried on the last page of each report, stating in full: ‘Projected Sold Adjustment—an adjustment to reflect consumer purchasing behavior (negotiating a different price than the listed price.’”

But the complaint alleges that these subtractions “do not reflect market realities … and run contrary to automobile dealer practices and inventory management, where list prices are priced to reflect the intense competition in the context of [I]nternet pricing and comparison shopping. A negotiated price discount would be highly atypical” and therefore not proper in determining ACV, the complaint claims. This is particularly true, the complaint alleges, because people who have lost their vehicles normally need to get another one immediately and do not have time to locate a below-market-price similar vehicle.

Such adjustments, the complaint alleges, go against normal appraisal standards and are not an accepted way of making ACV calculations. The complaint claims that “appraisal standards do not permit arbitrary adjustments from the advertised price based upon undocumented and unverifiable projections.”

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