California DA sues progressive, USAA insurers for ‘lowballing’ and screwdrivers

The prosecutor argues that by undervaluing vehicles, insurers can minimize their own payouts and then auction off the slightly damaged vehicles for more money.

    California DA sues progressive, USAA insurers for 'lowballing' and screwdrivers

  • Alameda County District Attorney Pamela Price is suing Progressive and USAA for undervaluing damaged vehicles.
  • In her lawsuit, she claims the insurers deliberately kept consumers low so they wouldn’t have to pay for repairs and get money back at the scrap auction.
  • USAA denies the claims and says the valuation model is sound.

It seems like every day we see a car at a salvage auction that has virtually no damage, yet has been declared a total loss by an insurance company. Pamela Price, the district attorney of Alameda County, California, thinks some of this may be due to dirty tricks that insurance companies play on their customers.

Price is suing insurers Progressive and the United States Automobile Association (USAA), as well as their affiliated software developers, over what she describes as a scheme to systematically undervalue the total value of cars and pay consumers less than what they owe under their policies .

Read: Price of car insurance increases by more than 20%, with majority of motorists affected

“Many residents live paycheck to paycheck and go deep into debt just to buy a car,” Price said, according to KRON. “If an insurance company underpays its customers for a totaled vehicle… That can lead to job losses and even homelessness.”

The complaint alleges that Progressive and USAA used specially designed software to “lowball” their customers about the value of their damaged vehicle. As a result, more vehicles were deemed total losses and insurers were able to sell them at salvage auctions.

“The nature of this transaction creates an obscure incentive” for the companies, the lawsuit alleges. “If (an insurer) can minimize the payment (actual cash value) to the insured, but still total the vehicle and sell the vehicle for scrap, this minimizes indemnity losses on the claim.”

    California DA sues progressive, USAA insurers for 'lowballing' and screwdrivers

Price argues that the consequences of this pattern of behavior have ripple effects that extend beyond the insurance companies’ customers. She alleges that Progressive and USAA have harmed auto manufacturers by lowering the market value of their used vehicles, repair shops that lost work, auto loan institutions whose customers defaulted on their loans after being underpaid, and gap insurance providers, who were required to make good the damage . difference between an outstanding loan and an undervalued amount.

Insurers are responding

For its part, USAA said Price’s claims are “completely lacking in merit” and that it looks forward to “refuting them in court,” according to the San Antonio Express-News. The company was previously sued in 2019 for allegedly undervaluing vehicles, but won a summary judgment after the judge in the case found no evidence that a state regulator had ever described its evaluations as “improper, illegal, unethical, dishonest or otherwise improper . ”

In this latest case, USAA and Progressive are facing civil complaints, and Price is seeking civil penalties, injunctive relief and restitution for California consumers.

    California DA sues progressive, USAA insurers for 'lowballing' and screwdrivers