Progressive Class Action Alleges Insurer Low-Balls Total Loss Offers

A new consumer fraud class action lawsuit accuses Progressive Casualty Insurance Company and Mitchell International Inc. of engaging in multiple schemes to defraud policyholders by undervaluing “comparable automobiles” in cases of total property loss in order to increase profits.

California plaintiff Bobby Jones alleges that since at least 2010, Progressive and its third party claims provider Mitchell have engaged in “unlawful, unfair and deceptive business practices” in order to “lowball” property damage offers to its policyholders where there is a total loss situation.

Specifically, the lawsuit claims that the companies fail to use lawful “comparable automobiles” as required by law for purposes of determining the total loss value, employing methods contrary to the California Insurance Regulations – and in “outright deception,” according to the complaint.

In October 2015, Jones purchased a 1999 Chevrolet Venture for a list price of $3,250 before tax, title, and license. Less than one month later, Jones’ vehicle was involved in a serious accident and his insurer, Progressive, deemed his Chevy Venture a total loss.

Progressive made a final offer to settle the claim for $2,488.40, which was $761.60 less than what Jones paid for the vehicle one month earlier. Jones asserted that he had just purchased the vehicle in October and requested that Progressive use that list price as the comparable vehicle.

According to the class action lawsuit, Progressive refused to and instead obtained three other “comparable vehicle” quotes through Mitchell, one of which was from Oregon and one of which was a salvage vehicle from Oklahoma. The third comparable vehicle used was from an alleged quote from dealers in the area, but Jones contends Progressive never actually obtained these quotes from licensed dealers.

“Based on these and other misrepresentations, Bobby Jones was induced to accept a reduced valuation of his 1999 Chevrolet Venture,” the lawsuit claims.

California’s Insurance Code sets standards for evaluation and paying automobile total loss claims. For first party claims, the insurer must follow a strict set of guidelines that helps it determine which vehicles are “comparable automobiles,” which are in turn used to make an offer to the insured for total loss property claims.

Jones’ complaint states that Progressive was fully aware that Mitchell was using out of market “comparable vehicles” and was not fairly adjusting for differences between “comparable vehicles” and the total loss vehicles.

“At all relevant times, Defendants, and each of them, engaged in various schemes to deflate the value of declared ‘total loss vehicles’ (vehicles where an election is made to forego any vehicle repair) in order to pay first party insured less than the actual pre-loss value of the total loss vehicle,” the lawsuit states.

One of these alleged schemes, the lawsuit points to, was for Progressive and Mitchell to use vehicles with salvage titles as a “comparable vehicle” without disclosing the fact that they were salvage vehicles and without making any adjustment for the fact that it deemed a salvage vehicle as a comparable.

Another scheme involved the companies failing to properly seek, use, and report dealer quotes as required by law. Where no “comparable vehicles” are available to determine the value of the total loss vehicles, insurers are entitled to use “the average of two or more quotations from two or more licensed dealers in the local market area.”

In a third scheme, Progressive and Mitchell had a policy of ignoring “comparable vehicles” from licensed dealers that it deemed to be priced too high. Instead, the companies would use non-compliant “comparable vehicles.”

“[Progressive and Mitchell] had a practice to not contact licensed dealers to obtain a quote. The Defendants fabricated contacts with dealers as well as deflated the quote obtained by dealers,” Jones claims.

This failure to properly use or obtain dealer quotes allowed the companies to reduce the calculated value they paid for total loss vehicles, the complaint contends.

The lawsuit also alleges that a fourth scheme involved the companies ignoring the insured’s purchase price for the vehicle, even when the purchase was made during the time frame in which other supposedly “comparable vehicles” were considered.

Jones is seeking to certify an injunctive relief Class and restitution subclass consisting of California residents who were first party insured making claims to Progressive for total loss vehicles at any time within the four years prior to the filing of this complaint.

Jones and the proposed Class are represented by David A. Kleczek of Kleczek Law Office and H. Paul Bryant of the Law Offices of H. Paul Bryant.

The Progressive Insurance Total Loss Class Action Lawsuit is Bobby Jones v. Progressive Casualty Insurance Company, et al., Case No. 3:16-cv-06941, in the U.S. District Court for the Northern District of California.

UPDATE: On Sept. 19, 2018, a federal judge told Progressive that they must face class action lawsuit claims, finding that the plaintiffs sufficiently argued their allegations that the insurance company undervalues “comparable automobiles” when evaluating property loss claims.