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(USA Herald) – This is the case of Holmes et al. v. Progressive Universal Insurance Co. et al., in the U.S. District Court for the Northern District of Illinois.

A class of vehicle owners can pursue claims against Progressive Insurance, alleging that the company failed to disclose material information regarding the way it values total-loss vehicles. This ruling came from an Illinois federal court while dismissing several remaining claims that the insurer engaged in deceptive and unfair conduct in violation of the state's consumer fraud act.

The lawsuit, filed last February by policyholders Normanda Holmes and Neil Young, claims that Progressive undervalued their vehicles that were deemed total losses after they were involved in separate car crashes in 2020.

The policyholders alleged that Progressive breached their policies and acted in bad faith by applying a downward adjustment to comparable vehicles, which resulted in a lower actual cash value than they should have obtained. They also claim that Progressive's practices violated the Illinois Consumer Fraud and Deceptive Business Practices Act, or ICFA.

The valuation report used to calculate the actual cash value of total-loss vehicles is prepared by third-party Mitchell International Inc., which includes the application of a "projected sold adjustment," or PSA, to account for consumer purchasing behavior and determine the value of comparable vehicles.

U.S. District Judge Sara L. Ellis ruled that the policyholders sufficiently alleged a deceptive conduct claim under the ICFA, regarding allegations that Progressive failed to disclose material facts about the application of the PSA. The judge also held that the policyholders have not asserted a claim for unfair conduct under the ICFA, with the possible exception of their allegation that Progressive violated Illinois law. However, the judge dismissed the claim without prejudice, finding that the policyholders failed to adequately plead that Progressive's actions violated the state's total-loss regulation.

The policyholders are also permitted to pursue their bad faith claim in addition to their claim for breach of contract, which sufficiently alleged that the insurers breached the policy provision requiring them to pay the limit of liability, the judge said.

The policyholders claim that they would have been $445.00 and $374.80 better off, respectively, but-for the application of a PSA, Judge Ellis said, noting that they plausibly alleged an injury sufficient to survive Progressive's motion to dismiss.

Progressive Insurance is now facing a lawsuit that could have significant financial implications for the company, as well as for the policyholders who were underpaid for their total-loss vehicles. The case serves as a reminder for all policyholders to be vigilant and aware of the value of their vehicle and the process that insurance companies use to determine that value in case of total-loss.