Progressive just avoided a class action over how it values totaled cars- but not without a warning from the Third Circuit about individualized claim issues.
On July 7, 2025, the US Court of Appeals for the Third Circuit reversed a lower court’s decision to certify two damages classes in a lawsuit against Progressive Specialty Insurance Co. and Progressive Advanced Insurance Co. The plaintiffs, all Pennsylvania policyholders, argued that Progressive systematically underpaid total loss auto claims by using a “Projected Sold Adjustment,” or PSA, to lower settlement amounts.
The PSA, applied through Mitchell International’s WorkCenter Total Loss system, reduces the listed price of comparable vehicles to account for the common practice of dealers negotiating down from list prices. Plaintiffs said this adjustment unfairly lowered the actual cash value (ACV) Progressive was contractually obligated to pay. They claimed this breached Progressive’s auto policy, which states that ACV is “determined by the market value, age, and condition of the vehicle at the time the loss occurs.”
Progressive countered that its valuation approach used a dual-source system combining data from Mitchell and the National Automobile Dealers Association (NADA), followed by additional adjustments based on vehicle condition and other factors. According to Progressive, the PSA is not applied uniformly and varies depending on the make, model, location, and sale environment of each vehicle. It also argued that even with the PSA, many claimants may have received payments equal to or above their car’s true ACV.
The Third Circuit agreed. The panel, led by Judge Scirica, held that the question of whether any individual insured was underpaid could not be answered across the entire class using the same evidence. Instead, it would require looking at each policyholder’s specific claim to determine whether the final payment fell short of the ACV. That level of individualized inquiry defeated the predominance requirement under Rule 23(b)(3), which is needed for a damages class to be certified.
The court emphasized that a breach of contract would occur only if Progressive paid less than the ACV—not simply because a PSA was used. It concluded that class-wide liability couldn’t be proven without reviewing each payout to see whether it met or fell below the contractually promised amount.
Because of that, the Third Circuit reversed the District Court’s class certification order and sent the case back for further proceedings.
For insurance professionals, the ruling highlights a key issue: even standardized claim practices like PSAs may not expose carriers to class action risk if the actual effect on payouts varies claim by claim. It also reinforces that auto policies allowing for third-party valuation tools, when used with documented and variable inputs, can provide strong defenses against uniform breach allegations.
