Progressive to Pay $48M to New York Drivers Over Underpaid Total Loss Claims

Progressive Insurance has agreed to a $48 million settlement with a class of 93,000 New York policyholders who claim the insurer underpaid their total loss claims on their vehicles.

The $48 million represents approximately 54% of the compensatory damages alleged by the plaintiffs plus pre-judgment interest. The settlement covers New York drivers who have filed claims since July 28, 2015. After payment of attorneys’ fees and administrative expenses, the amount to be distributed is approximately $31.3 million, yielding individual payments of about $335 on average.

The plaintiffs allege that the third party software used by Progressive — Mitchell International, Inc.’s WorkCenter Total Loss — applies an improper adjustment called the projected sold adjustment (PSA) in settling total-loss claims. By using the Mitchell valuation reports, and applying the PSA, Progressive “systemically thumbs the scale” when calculating the actual cash value of claimants’ loss vehicles, according to the plaintiffs’ complaint.

The plaintiffs claim that the PSA results in a 6.5% underpayment. They maintain this underpayment represents a breach of New York automobile insurance policies and a violation of the state’s General Business Law.

Language in Mitchell’s reports explains that the downward adjustment is meant to “reflect consumer purchasing behavior” in negotiating a different price than the listed price.

Although it has agreed to settle, Progressive continues to deny any wrongdoing and insists it has complied with all auto insurance policies and all insurance laws. It argued that the Mitchell software was approved by the state’s insurance department.

Lead plaintiffs Dominick Volino and John Plotts fled their proposed class action in July 2021. On March 16, 2023, U.S. District Judge Lorna Schofield certified two litigation classes: a breach of contract class and a General Business Law class. On June 11, 2024, with less than a month before the start of trial, the parties began mediation. The proposed settlement was filed on July 1.

In urging the judge to approve the agreement, plaintiff attorney Hank Bates called the proposal “an excellent result and in the best interest” of the classes.

Judge Schofield has set a preliminary approval hearing for August 14.