The Gluckstein Lawyers Class Action and Mass Tort team recently joined Nova Scotia's Wagners Law Firm in a national class action lawsuit filed against the automobile insurance industry that is aimed at rectifying inequities in the valuation of total loss collisions.
In the statement of claim filed in the Supreme Court of Nova Scotia, which is yet to be certified, we allege that insurance companies "systemically thumb the scale" when calculating the actual cash value (ACV) of vehicles being written off after an accident. This echoes similar litigation that is taking place in the United States. We anticipate more claims will follow here and in the U.S.
Different insurers use different programs to calculate ACV and what we allege they do is take a percentage off the price that their algorithm generates. Perhaps it is three per cent, five or seven per cent. It doesn't sound like much until you factor in the tens of thousands of vehicles written off each year across Canada. It can add up to millions of dollars.
This action was filed on behalf of those who received a total loss payment of an insured vehicle from a defendant insurer who used valuation reports prepared by Mitchell International, Inc. and/or Audatex (also known as Solera) to determine the ACV.
'Reduced the Vehicle's Actual Cash Value'
We allege that the plaintiffs accepted their insurance company's representations "not knowing the valuation methodology systemically reduced the vehicle's actual cash value."
In Canada, insurance companies are guided by similar regulations governing the procedures in a total loss collision. In Nova Scotia, for example, the standard policy states: "The insurer shall not be liable for more than the actual cash value of the automobile at the time any loss or damage occurs, and the loss or damage shall be ascertained or estimated according to that actual cash value with proper deduction for depreciation, however caused, and shall not exceed the amount that it would cost to repair or replace the automobile, or any part thereof, with material of like kind and quality; but if any part of the automobile is obsolete and out of stock, the liability of the insurer in respect thereof shall be limited to the value of that part at the time of loss or damage not exceeding the maker's latest list price."
In this lawsuit, the plaintiffs argue that the "actual cash value" of a motor vehicle is the market value of the vehicle if sold on a free market on the date of loss. Simply put, we say the plaintiffs did not receive what they were entitled to following the insurers' evaluation process.
In our statement of claim, we allege insurers unfairly benefited "when calculating the ACV of claimants' loss vehicles, by applying a so-called 'Projected Sold Adjustment' or 'Typical Negotiation Adjustment' (or similar alleged consumer behaviour 'adjustment', however named), to lower the value of the vehicle."
We argue that the insurers' adjustments are:
- not reflective of either actual cash value or true depreciation;
- arbitrary and deceptive;
- contrary to generally accepted appraisal standards and methodologies; and
- contrary to the used car industry's pricing and inventory management practices.
It is our aim, along with Wagners, to inform the public of this national class action filed against various insurance companies for using programs which we allege improperly calculate total loss valuations resulting in under-compensation to insurers that potentially totals millions of dollars.
We Can Help.
If you or someone you know was involved in a collision that resulted in a total loss valuation, contact the class action lawyers at Gluckstein Lawyers for more information about your rights and options. To read the statement of claim, click here.