Lawsuit: Progressive Uses Flawed Method to Determine Car Value in Total Loss Claims

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Progressive Select Insurance Co. is on the receiving end of a proposed class action lawsuit that takes issue with the company’s method of determining the “actual cash value” (ACV) of a vehicle declared to be a total loss.

The plaintiff in the case – an individual insured under one of the defendant’s policies – claims he was involved in a motor vehicle accident in which his car was damaged enough to be declared a “total loss.” Under Progressive’s policy, the man was to be paid the “actual cash value” of his car, which the suit explains is defined by Florida law as “replacement cost minus depreciation.” To determine the ACV of vehicles, the defendant allegedly uses a software platform known as Mitchell WorkCenter Total Loss (WCTL) that the suit claims relies on “an invalid method and algorithm for determining value of insureds’ vehicles.”

Florida law allows the use of databases to determine ACV in total loss claims only when the database is “a generally recognized used motor vehicle industry database,” the case points out. Per the complaint, the WCTL software – developed and marketed by third-party Mitchell International, Inc. – was designed for use solely by insurance companies and is not an objective industry source used to determine the actual retail cost of used cars.

The case further argues that because the defendant chose to use Mitchell’s software instead of a “generally recognized used motor vehicle industry source,” it was obligated to provide additional disclosures and explanations of how it determined the ACV of its vehicles. According to the lawsuit, the defendant made unlawful deductions from the ACV’s of insureds’ cars without disclosing what they were or how they were calculated. The plaintiff claims that, as a result, he was paid less for his totaled car than he should have been paid under the terms of his insurance policy.

The lawsuit rounds out in chastising the defendant for allegedly transferring ownership of totaled vehicles to itself without paying the previous owners “any form of monetary consideration attributable to the salvage value of those properties,” in potential violation of Florida law.