The United States Court of Appeals for the Ninth Circuit has declined to certify a class-action lawsuit against Progressive Preferred Insurance Co. that alleged the insurer undervalued totaled vehicles, leading to lower actual cash value (ACV) settlements.
The Ninth Circuit’s decision upholds a lower court’s ruling that denied class certification. The lower court determined that individual questions about each plaintiff’s ACV calculation outweighed any common issues shared by the group.
The appeals court agreed, stating that the lawsuit would require a case-by-case examination to determine if each plaintiff was harmed, and each individual would need to compare the allegedly flawed market value with the correct one in order to succeed on the merits.
The plaintiffs alleged that Progressive used a projected sold adjustment process, which assumes a consumer will negotiate a different price than what is listed by a car seller. According to the complaint, these adjustments resulted in a negative line-item adjustment and kept the ACV from reflecting the true market value.
Federal Circuit Judge Evan Wallach dissented, writing that certification was appropriate because questions of law or fact common to the class members should take priority over questions about the contracts, breach of contract, and resulting injuries.
Wallach also said the majority’s opinion did not align with previous rulings from the Ninth Circuit and other federal courts.
The Ninth Circuit’s ruling in favor of Progressive was viewed as a significant decision for the insurance industry, setting a high bar for policyholders seeking class-wide relief over valuation methods in total loss auto claims.
Progressive Insurance Group is one of the top 10 personal auto insurance companies in Pennsylvania. Learn more in this guide.
The case centered on Progressive’s use of the “projected sold adjustment,” which reduces listed prices to reflect typical consumer negotiation. The court found that the policy language did not categorically prohibit this method, and without such a bar, each claimant would need to show individually that the adjustment led to an underpayment.
Meanwhile, Progressive is also facing scrutiny in Pennsylvania, where a court is examining allegations that an adjuster interfered in a client’s settlement talks to limit underinsured motorist (UIM) exposure.
The case, which involves claims of bad faith and breach of contract, underscores the importance of clear policy language and careful conduct by insurance professionals during settlement negotiations.
What are your thoughts on this story? Please feel free to share your comments below.
