Four subsidiaries of Progressive Corp. have settled a class action lawsuit filed against them in New York that alleged underpaid total loss claims.

The suit was filed in 2021 and claims that Progressive “systemically thumbs the scale” against claimants by applying a so-called “Projected Sold Adjustment (PSA)” that reduces the base values of the comparable vehicles used to calculate the actual cash value of claimants’ total loss vehicles. The negative price adjustment is applied on top of normal adjustments for differences such as trim level, mileage, or options.

According to the suit, the only explanation of what PSA is appears on the last page of the valuation reports as a “general, nondescript statement” claiming that the reduction is to “reflect consumer purchasing behavior (negotiating a different price than the listed price).”

The plaintiffs claimed that Progressive declared their vehicles total losses and promised to pay them the actual cash value to buy replacements. However, Progressive underpaid the plaintiffs using PSAs that are allegedly “(a) deceptive and unexplained; (b) contrary to appraisal standards and methodologies; (c) not based in fact, as they are contrary to the used car industry’s market pricing and inventory management practices; (d) not applied by the major competitor of Defendants’ vendor Mitchell; and (e) on information and belief, not applied by Defendants and Mitchell to insureds in other states like California.”

In response to the suit, Progressive stated that the New York Superintendent of Insurance approved its use of Mitchell software, including the PSA, as a “valid valuation methodology.” The defendants also stated that the plaintiffs failed to state a claim.

“No plaintiff alleges that any defendant engaged in purportedly deceptive conduct outside of their purported failure to pay actual cash value under the terms of their policies,” Progressive’s motion to dismiss states.

According to the approved settlement, agreement to the terms by the parties doesn’t mean the allegations or defense arguments are valid.

Nearly $13.5 million will be awarded for attorney fees plus nearly $343,000 to the class attorney for litigation and lawsuit resolution expenses.

Each of the seven plaintiffs will receive $3,000 plus individual lost wages or out-of-pocket costs claimed by each, adding up to a combined $28,300.

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