A lawsuit has been filed and is seeking class action status against the insurer for allegedly illegally steering customers to certain auto body shop repairers and paying unreasonably low labor rates to fix vehicles after an accident. The lawsuit was filed in US District Court in New Haven by the Auto Body Association of Connecticut and three body shops. The lawsuit claims Progressive instituted a system of preferred shops and in-house appraisers to suppress labor rates and steer policyholders to the shops in order to extract enormous profits from automobile insurance programs in Connecticut.
Auto body shops claim Progressive interferes with consumer choice and repairers' ability to make a living. Progressive allegedly tells customers it does not do business with non-direct repair shops, or that a claim may not get paid if the work isn't done at a direct repair shop. Progressive allegedly illegally imposes a cap on labor rates it pays repairers of about $44 to $46 an hour in the state of Connecticut. The posted rates at shops for work not covered by insurance are more than $70 an hour. The suit alleges Progressive violated the Connecticut Unfair Trade Practices Act and has been unjustly enriched by withholding money it improperly failed to pay body shops.
