Progressive has agreed to pay $13.8 million to settle a class-action lawsuit in New York. The plaintiffs alleged that the insurance provider underpaid policyholders after totaling their cars. The lawsuit, filed in 2021, claimed Progressive used a pricing tactic called “Projected Sold Adjustment” (PSA) to reduce payouts unfairly. So, what’s PSA in layman’s terms?

According to the lawsuit, Progressive applied this negative price adjustment to lower the value of comparable vehicles used in total loss calculations. Insurers normally adjust for mileage, trim, and optional features. The plaintiffs argued that PSA acted as an extra, unexplained deduction. They claimed this tactic unfairly reduced the amount Progressive owed.

The lawsuit also accused Progressive of burying PSA’s explanation deep in valuation reports, using vague language that described it as an adjustment based on “consumer purchasing behavior.” The plaintiffs challenged this claim, arguing that PSA didn’t follow used car industry standards and wasn’t common practice among competitors. They also pointed out that Progressive didn’t apply PSA in states like California, raising questions about fairness.

Progressive defended its approach, stating that New York’s insurance regulators had approved PSA as a valid valuation method. The company also argued that the lawsuit failed to prove any deceptive business practices beyond what its policies already outlined.

Despite defending its methods, Progressive chose to settle. The company will pay nearly $13.5 million in attorney fees and an additional $343,000 to the class attorney, Repairer Driven News shared. On top of that, seven plaintiffs will each receive $3,000, plus reimbursement for lost wages and out-of-pocket expenses, landing around $28,000.

The settlement closes the case but doesn’t include an admission of wrongdoing. In fact, the case raises larger questions about how insurers calculate total loss values and whether customers receive fair payouts when their cars get too damaged to repair.