A federal appeals court has upheld Progressive’s use of a pricing adjustment in total loss auto claims, influencing class action risks for insurers.
A recent ruling from the Ninth Circuit Court of Appeals is drawing attention across the insurance industry, particularly among professionals involved in auto claims and compliance. On Sept. 12, the court affirmed a lower court’s decision in favor of Progressive Preferred Insurance Company in a dispute over how the insurer calculates payouts for totaled vehicles - a case with implications for claims handling nationwide.
The case was brought by former Progressive customers in Arizona, Elliott Ambrosio and Sierra Trenholm, who challenged the company’s use of the “projected sold adjustment,” or PSA. This adjustment reduces the listed price of comparable vehicles to reflect typical consumer negotiation below the advertised price.
Ambrosio and Trenholm argued that the PSA unfairly lowered the actual cash value (ACV) of their vehicles, resulting in reduced insurance payments. They claimed the PSA did not account for reasons a vehicle might sell below list price, such as special discounts, and excluded transactions where vehicles sold above the list price. According to the plaintiffs, this method breached Progressive’s standard auto policy, which required payment of the “market value, age, and condition” of the vehicle at the time of loss.
The plaintiffs sought to certify a class action for all Arizona policyholders who had total loss claims where Progressive applied the PSA. The district court denied class certification, finding that while there were common questions about the PSA, determining whether each customer was harmed would require individualized analysis of each claim.
On appeal, the Ninth Circuit agreed. The court found that the policy defined ACV as the “market value, age, and condition” of the vehicle, but did not specify how market value must be calculated or prohibit the use of the PSA. The court held that, without a categorical bar on the PSA, each claimant would need to show individually that the adjustment led to an underpayment, making class treatment inappropriate.
Judge Evan J. Wallach dissented, arguing that the insurer’s methodology and the core policy interpretation questions were common to all affected customers and should have been resolved together.
For insurance professionals, the Ambrosio decision highlights the importance of clear policy language and the challenges of certifying class actions over claims practices. The ruling does not prevent future challenges but sets a high bar for policyholders seeking class-wide relief over valuation methods.
