July 21, 2024
Insurance

Progressive to pay $48 million to settle allegations of devaluing damaged vehicles

NEW YORK — Forward-thinking (PGR) has reached a settlement of $48 million to resolve a class action lawsuit alleging that the insurer systematically underestimated the claims of New York drivers whose vehicles were totaled.

The preliminary settlement of the class action was submitted on Monday evening in federal court in Manhattan, pending approval by U.S. District Judge Lorna Schofield.

According to policyholders, Progressive utilized third-party software that undervalued the potential sale price of their vehicles before they were deemed total losses. They claimed that the software made adjustments that exaggerated the impact of negotiation, despite the availability of online pricing eliminating the need for such haggling. This alleged tactic to manipulate payouts was said to violate Progressive’s policies and New York’s general business law.

Progressive has denied any wrongdoing in agreeing to the settlement. The insurer, based in Mayfield, Ohio, and its legal representatives did not immediately respond to requests for comment on Tuesday.

The settlement applies to New York policyholders from July 28, 2015, onward. Each member of the settlement class is anticipated to receive a $335 compensation, as outlined in court documents. The policyholders’ attorneys may request up to $16 million in legal fees.

The case is Volino et al v Progressive Casualty Insurance Co et al, U.S. District Court, Southern District of New York, No. 21-06243.

 

FAQ

Q: What was the basis of the lawsuit against Progressive?

A: The lawsuit accused Progressive of undervaluing the claims of New York drivers whose vehicles were totaled, allegedly due to the use of third-party software that underestimated the vehicles’ worth.

Q: What was the outcome of the settlement?

A: Progressive agreed to pay $48 million to settle the class action lawsuit, with individual policyholders expected to receive $335 each as part of the settlement.

Conclusion

In conclusion, Progressive’s agreement to settle the class action lawsuit highlights the importance of fair valuation practices in the insurance industry. The resolution of this case serves as a reminder to insurers to prioritize transparency and accuracy in assessing claims to uphold the trust of policyholders.

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