American Family Mutual Insurance Co. Undervalues Total Loss Claims, Class Action Says

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American Family Insurance Price Adjustment Class Action Lawsuit Overview: 

• Who: Jeremy Urbassik filed a class action lawsuit against American Family Mutual Insurance Co. 
• Why: Plaintiff alleges American Family Mutual knowingly paid total loss claims based on reduced prices.
• Where: The class action lawsuit was filed in Ohio federal court. 

American Family Mutual Insurance Co. deceptively undervalues total-loss vehicles to reduce payments to claimants, according to a new class action lawsuit.

Plaintiff Jeremy Urbassik claims that In the event of a “total loss” to an insured vehicle, i.e., where repair of the vehicle is impossible or uneconomical, American Family Mutual’s insurance policies promise to pay for the loss, limited to the actual cash value (“ACV”) of the vehicle.

However, according to the lawsuit, American Family Mutual “skirts its straightforward contractual obligation” by directing its third-party vendor to systematically reduce the total loss evaluations. Specifically, the vendor determines the ACV of an insured total loss vehicle by comparing the for-sale price of “comparable vehicles” in the relevant market. After the vendor determines the price for “comparable vehicles,” however, the defendant instructs its vendor to apply a “selling price adjustment” reduction to each comparable vehicle. 

This reduction reduces the ACV calculation of the total-loss vehicle and, consequently, reduces the amount of the defendant’s total loss payment to insureds.

“Under the policy, defendant had discretion to perform its obligations under the contract, including its obligation to determine the ACV of an insured’s total loss vehicle. Defendant, however, exercised its discretion unreasonably, with an improper motive, and in a manner that was arbitrary, capricious and inconsistent with the reasonable expectations of the parties, specifically, to arbitrarily reduce the amount of its ACV payment to insureds,” the lawsuit states.

New Class Action Lawsuit Claims American Family Mutual Insurance Unfairly “Adjusts” Total-Loss Payments

In 2017, Urbassik suffered a total loss to his vehicle and made a claim with American Family Mutual Insurance Co.

The defendant provided a total loss valuation based on a valuation report obtained from AudaExplore, according to the lawsuit. It valued the plaintiff’s total loss vehicle as having a market value of $6,853.00 and paid that amount.

However, among other adjustments, the defendant breached their contract by applying a “selling price adjustment” of 9% ($614.17). 

“Defendant offers no factual, legal or contractual justification for this arbitrary reduction, stating nothing more than that “[i]n the case of this 2006 Chrysler 300, the difference between the asking price and selling price is generally 9%,”” according to the lawsuit.

Urbassik brings the class action lawsuit on behalf of himself and other Ohio citizens who received a first-party total loss valuation and payment on an automobile total loss claim that included a “selling price adjustment” or similar adjustment.

“Defendant’s breaches of the covenant of good faith and fair dealing have caused damages to plaintiff and the class,” the lawsuit states.

The defendant seeks an award of actual, compensatory, statutory damages; restitution to plaintiff and the class in an amount to be determined at trial, plus interest, in accordance with law; disgorgement of defendants’ profits; appropriate preliminary and/or final injunctive or equitable relief against the conduct of defendants; and attorneys’ fees.

Have you filed a total-loss claim with American Family Mutual Insurance Co. and received a “selling price adjustment”? Let us know in the comments! 

The plaintiffs are represented by Andrew J. Shamis and Joshua Moyer of Shamis & Gentile, P.A. and Scott Edelsberg and Christopher Gold of Edelsberg Law, PA. 

The American Family Mutual Insurance Selling Price Adjustment Class Action Lawsuit is Urbassik, et al. v. American Family Mutual Insurance Co., Case No. 1:21-cv-01974-JPC, in the U.S. District Court for the Northern District of Ohio Eastern Division.

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