How does an insurance company determine the actual cash value (ACV) when a vehicle is totaled in an accident? The complaint for this class action alleges that Trumbull Insurance Company uses improper methods to determine the ACV of vehicles, resulting in underpayments to its insureds.
The complaint refers to Trumbull throughout as “Hartford.” It does not explain this. While the most likely explanation may be that Trumbull sells policies underwritten by Hartford, it is not clear whether the actions alleged were taken by and/or the responsibility of Trumbull or a Hartford entity.
The class for this action is all individuals insured by Hartford under a policy issued or effective in Arkansas who (a) had a total-loss claim with Hartford (b) where the settlement was calculated using the Mitchell Report (c) between March 6, 2014 and the present.
Plaintiff Nora Ann Beth lives in Arkansas. Her 2005 Cadillac DeVille was insured under a policy from Hartford. In March 2016, she had an accident, and Hartford declared it a total loss.
Under Arkansas law, an auto insurer, in valuing a vehicle must use “one (1) of two (2) or more quotations obtained by the insurer from two (2) or more qualified dealers or appraisal services located within the local market area.”
If the insurer deviates from what the law specifies and uses another method, the complaint says, “the deviation must be supported by documentation giving the particulars of the automobiles condition, and ‘[a]ny deductions from such cost, including deduction for salvage, must be measurable, discernable, itemized, and specified as to dollar amount and shall be appropriate in amount.’” The law also requires that “[t]he basis for such settlement shall be fully explained to the first party claimant.”
Hartford did not use the methods specified, according to the complaint. Instead, it used the Mitchell Vehicle Valuation Report from Mitchell International. The complaint alleges, “The Mitchell Report is sold almost solely to insurance companies, and it is marketed as reducing the costs of total value settlements.”
Hartford claimed the ACV for Beth’s vehicle was $6,530.84. The complaint alleges that this is an undervaluation, and that Mitchell “systematically undervalues vehicles by making a series of arbitrary and unexplained adjustments” to the vehicle prices it finds.
The complaint says Mitchell “automatically discounts any vehicle listed for sale by 11.5% for ‘consumer purchasing behavior (negotiating a different price than the listed price).’”
The complaint alleges that Mitchell makes other unexplained adjustments as well. “For example, although all four vehicles were listed as ‘Base’ vehicles, the price of three of the comparison vehicles were adjusted downward vis a vis Beth’s vehicle for ‘Equipment Group.’ Adjustments were also made for mileage and other options, but the Mitchell Report does not contain any information to explain the adjustment or support the amount of the adjustments.”