Commissioner says Progressive was ‘gaming the system,’ issues statewide directive

A CBS46 investigation uncovered a loophole that some insurers used to shortchange drivers. The commissioner’s new directive potentially puts millions of dollars into Georgian’s pockets.
Published: Mar. 28, 2022 at 2:58 PM EDT
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ATLANTA, Ga. (CBS46) - John King, Georgia’s Commissioner of Insurance and Fire Safety, has issued a directive to auto insurers, essentially telling them to stop cutting corners on total loss claims.

The directive is a result of a CBS46 investigation showing how Progressive calculated state ad valorem taxes for cars declared a total loss.

In addition to the car’s negotiated value, Georgia law requires auto insurers to pay for ad valorem taxes, tag, and fees. In Georgia, ad valorem taxes are 6.6-percent.

How Progressive Changed the Math

Although Georgia law requires insurers to make the additional payment, it does not clarify how insurers should calculate it.

When Steve Sapecky’s daughter totaled her 2020 Toyota Corolla, Sapecky went to arbitration and negotiated the car’s value at $25,000. In addition, he calculated ad valorem taxes by multiplying $25,000 x 6.6-percent. He calculated $1,650 for taxes but Progressive’s offer was $1,118.

Progressive saved $532 by using the Georgia Department of Revenue’s online ad valorem tax calculator. The calculator estimates the car’s average value by combining retail and wholesale prices. So, even though both sides agreed on one value ($25,000) Progressive used the state’s value, $16,950, to lower the tax payout.

“I was on the phone with my adjuster, and she told me their offer was final and there was nothing I could do. And I kept telling her to pull out a calculator and multiply 6.6-percent on the value ($25,000) and she said the offer was final,” Sapecky said.

A Progressive spokesman says the company was investigating Mr. Sapecky’s claim but stopped short of providing a statement. But after the story ran, a second Progressive customer came forward.

“I said every step of the way you are going after the little guy and I’m tired of it,” Patrick Telfor told CBS46′s Better Call Harry.

Telfor is a Lyft driver whose car was totaled in a rear end collision. Telfor also asked Progressive for arbitration and negotiated a settlement, but when he asked for ad valorem taxes and fees, Progressive used the state’s calculator, lowering the payout by $250.

Commissioner Issues Directive

“When you brought this to our attention it was very clear, we needed to make it clear to the industry what the expectations are,” Commissioner John King said in a sit-down interview.

Georgia Insurance and Safety Fire Commissioner
Georgia Insurance and Safety Fire Commissioner(CBS46)

Effective April 1, King’s directive removes the state’s ad valorem tax calculator as a tool to change values and tax payouts on total loss claims.

“When calculating taxes to be paid to an insured on a first-party auto claim, insurers should base the tax payment on the agreed-upon cash value of the vehicle,” King explained.

Commissioner King says his office’s directive potentially puts millions of dollars into the pockets of Georgia drivers.

“There might not have been clarity in the past, but there is absolute clarity now. And if they continue to engage in this practice, they (the insurance companies) are going to be sanctioned,” King said.

One day after CBS46 contacted Progressive about Mr. Telfor’s claim, he says an adjustor called to offer an additional payout of $500. Mr. Sapecky did not receive the $250 ad valorem tax he says he was entitled to.

If there’s something you would like CBS46′s Consumer Investigator Better Call Harry to look into, fill out this submission form.

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