Liberty Personal insurance Co. Fails to Pay Entire Actual Cash Value of Total-Loss Vehicles, Class Action Claims

New to ClassAction.org? Read our Newswire Disclaimer

Liberty Personal Insurance Company faces a proposed class action that claims the auto insurer has systematically undervalued policyholders’ vehicles that were deemed a total loss.

According to the 18-page case out of Louisiana, Liberty, rather than pay the full amount of a totaled car’s actual cash value, has “artificially, capriciously, and intentionally” undervalued total-loss vehicles by using a third-party system called Autosource Market-Driven Valuation.

Per the suit, the Autosource system violates Louisiana legal requirements by comparing vehicles outside the relevant market, identifying to insureds only a few comparable vehicles and making “unfounded downward price adjustments,” which result in policyholders being paid below the minimum amount required under their policies and state law.

“Upon information and belief, Defendant intentionally undervalues the total-loss claims, about which it knowingly and intentionally misinforms and misleads insureds concerning the Autosource system, including the selection of ‘comparable’ vehicles and utilizations of adjustments, and otherwise violates its duty of good faith and fair dealing and Louisiana law,” the complaint alleges.

Under Louisiana law, the actual cash value of a totaled vehicle must be determined by either a fair market value survey using “qualified retail automobile dealers in the local market,” the retail cost as determined by a “generally recognized used motor vehicle industry source” or an expert appraiser selected and approved by both the insurer and the policyholder. Liberty, however, has used, according to the case, “arbitrary and capricious vehicle values” determined by Autosource, an insurance industry source that the suit says routinely provides lower ACVs than the “actual cost to purchase” a vehicle of like kind and quality and “concomitantly lower” than the vehicle’s market retail cost.

Moreover, the lawsuit claims Liberty additionally reduces the ACV of policyholders’ vehicles by applying “hidden or obscure” adjustments and artificial “typical negotiation” adjustments. While the defendant purports to compare the total-loss vehicle to comparable vehicles and “adjust” its value based on the condition of the car, neither Liberty nor its agents actually view or evaluate the condition of the comparable cars and thus “have no basis for determining that the total-loss vehicle is worse in comparison,” the lawsuit alleges. The case claims Liberty also adjusts for “typical negotiation” without having any conversations with the sellers, which the lawsuit argues is “nothing more than another illegitimate and capricious way to undervalue the total-loss vehicles.”

The lawsuit charges that even if the defendant’s adjustments were legal—and “they are not,” the suit attests—Liberty orders the adjustments in a manner that is beneficial to the insurer and is “most disadvantageous to insureds.”

The plaintiff, a Baton Rouge resident, says his 2014 Jaguar XF was insured under a Liberty policy when it sustained damage on August 14, 2016. Per the case, the vehicle was deemed a “total loss” when the defendant elected to pay the vehicle’s actual cash value (ACV) instead of repairing it. Although Liberty, through the Autosource system, determined the vehicle’s value to be $36,431.00, the case argues that this pre-tax amount is “significantly less” than the value as determined by a “recognized used motor vehicle industry source” such as NADA or KBB. Per the suit, NADA values the plaintiff’s vehicle at roughly $39,300.00.

The lawsuit says Liberty cherry-picked comparable vehicles from irrelevant markets or with artificially low values and ignored vehicles that would have been favorable to the plaintiff. As a result, the plaintiff was paid an amount that was thousands of dollars lower than the car’s ACV as determined by motor vehicle industry sources, according to the suit.

Per the suit, Liberty’s failure to pay the actual cash value of the plaintiff’s vehicle and practice of devaluing total-loss vehicles constitute a breach of contract. 

Get class action lawsuit news sent to your inbox – sign up for ClassAction.org’s newsletter here.