Alameda DA Alleges 'Lowball' Payouts From Car Insurance Companies

ALAMEDA COUNTY, CA — The Alameda County District Attorney has filed a lawsuit against multiple car insurance companies alleging they conspired to underpay Californians who totaled their vehicles to bolster profits.

The consumer protection complaint filed by the DA's Consumer Justice Bureau alleges Progressive Insurance and the United Services Automobile Association (USAA) violated their legal duties and worked with software companies to undervalue vehicles and pay out owners less than they were owed.

"A vehicle is a lynchpin to life in California," said District Attorney Pamela Price. "Many residents live paycheck to paycheck and go deeply into debt just to buy a car. When an insurance company underpays its customers for a totaled vehicle, that can result in missed loan payments, damaged credit scores, impacted borrowing, and the inability to buy a replacement vehicle."

Price's suit alleges software developers worked with the insurance companies to manipulate and lower the "actual cash value" of totaled vehicles, allowing insurers to make "lowball" settlement offers. The DA's office alleges the insurance companies would resell the vehicle at auction to minimize losses after the policyholder agreed to the low offer.

The suit seeks restitution and civil penalties, alleging violations of the state insurance code and laws against unfair competition and false advertising.

"Public safety includes protecting consumers from powerful companies that seek only to maximize profits," Price said. "We are seeking to level the playing field for vehicle owners who face what looks like a rigged game when their car or truck is totaled because a loss of a vehicle can destabilize a person's life."

The DA's office asks anyone who believes their insurer undervalued their totaled vehicle to complete a consumer fraud complaint form.