Progressive settles class action lawsuit for $48 million in undervalued claims
Progressive (PGR) has agreed to pay $48 million to settle a class action lawsuit accusing the insurer of undervaluing the claims of New York drivers whose vehicles were wrecked. The preliminary settlement was filed in federal court in Manhattan and is pending approval by U.S. District Judge Lorna Schofield.
Progressive’s use of third-party software
Policy holders alleged that Progressive used third-party software that underestimated the value of their vehicles before they became total losses. The software made adjustments that overstated the impact of haggling, despite the ease of finding prices online. This practice artificially reduced payouts, violating Progressive’s policies and New York’s general business law, according to the policy holders.
Progressive denies wrongdoing
Despite agreeing to settle the lawsuit, Progressive denied any wrongdoing. The Mayfield, Ohio-based insurer and its lawyers did not immediately respond to requests for comment on the matter. The settlement covers New York policy holders from July 28, 2015, to the present, with each member of the class expected to receive a $335 check.
Legal fees and case details
Lawyers for the policy holders may seek up to $16 million in legal fees as part of the settlement. The case is identified as Volino et al v Progressive Casualty Insurance Co et al, and is pending in the U.S. District Court, Southern District of New York, under case No. 21-06243.
In conclusion, Progressive’s settlement of the class action lawsuit highlights the importance of fair valuation practices in the insurance industry. The agreement to pay $48 million serves as a reminder to insurers to accurately assess and compensate policy holders for their claims.