A proposed class action lawsuit claims Progressive Marathon Insurance Company has applied an arbitrary “projected sold adjustment” reduction to the value of vehicles declared a total loss, apparently as a means to decrease the amounts paid to claimants.
According to the 16-page case out of Michigan federal court, the defendant’s “projected sold adjustment” does not reflect market realities and is not permitted under either state law or Progressive’s auto insurance policies. The lawsuit claims Progressive policyholders would not have purchased the company’s insurance coverage, nor paid the same price for such, had they known the insurer would apply “arbitrary, baseless, and illegal” deductions to their total loss payments.
In the event that an insured vehicle is declared a “total loss,” i.e., when repairing damage to the car is impossible or uneconomical, Progressive, pursuant to its auto insurance policies, promises to pay for the loss, limited to the actual cash value (ACV) of the vehicle, the lawsuit says.
According to the suit, however, Progressive attempts to “skirt its straightforward contractual obligation” by directing a third-party valuation vendor, Mitchell, to systematically reduce total loss evaluations. Per the case, Mitchell averages the price of currently or recently available comparable vehicles to calculate the “retail dollar value” of a total-loss car through a system called the Mitchell Vehicle Valuation Report. The case alleges that Progressive then directs Mitchell to apply to a vehicle’s value a “projected sold adjustment,” purportedly to account for “some sort of average difference between a dealer list price and ‘what the dealer would be willing’ to sell it for.”
The lawsuit argues that the reduction is unsupported by data and unlawful.
“[A]n across-the-board 7% reduction on used vehicles’ internet prices is not typical and does not reflect market realities, and neither Michigan Law nor the Policy permit Defendant to make this arbitrary deduction,” the complaint scathes.
The lawsuit goes on to claim that Progressive makes its “arbitrary” across-the-board projected sold adjustment without contacting used car dealerships or considering whether the online retailer ever discounts its vehicles. Most used car dealerships, the case alleges, have banned price negotiation, and even the few that do allow for such do not negotiate online prices.
The suit further argues that the “arbitrary, capricious, and meretriciously labeled” projected sold adjustments cannot reflect market realities given they are based on national, and not market, data.
Per the case, Progressive has not only applied unlawful deductions to vehicles’ ACVs but has instructed Mitchell to apply positive “vehicle description” adjustments before the projected sold adjustment and any negative adjustments after the projected sold adjustment.
The plaintiff says his 2010 Honda Accord LX 4-door sedan was insured under a Progressive policy and declared a total loss in May 2017. According to the suit, the market valuation report for the plaintiff’s vehicle listed four comparable vehicles and showed that Mitchell applied a projected sold adjustment of seven percent to three of the four vehicles “without itemizing or explaining the basis of each adjustment and/or how the value of the deduction was determined.”
The lawsuit, which alleges violations of the Michigan Consumer Protection Act, looks to represent all Michigan citizens insured by Progressive who, from the earliest allowable time through the date a class is certified, received a first-party total loss valuation and payment on an automobile total loss claim that included a projected sold adjustment or similar adjustment.
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