Gluckstein Lawyers and Wagners Law Firm announced Feb. 25 that the firms have jointly filed a proposed class action lawsuit against several automobile insurance companies in Canada, alleging that they have systematically underpaid consumers involved in total loss accidents. The firms jointly filed the suit with the Supreme Court of Nova Scotia on Dec. 5, 2024.

Although Gluckstein’s website names others as well, the insurers named in the suit specifically include: 

  • Aviva General Insurance Company 
  • AXA Insurance (Canada)  
  • Beneva Insurance Company 
  • The Dominion Insurance Corporation 
  • Economical Insurance  
  • Intact Insurance Company  
  • Jevco Insurance Company 
  • Northbridge General Insurance Corporation 
  • RBC Insurance Agency Ltd. 
  • Royal & Sun Alliance Insurance Company of Canada 
  • Security National  
  • Travelers Insurance Company of Canada  
  • Wawanesa Mutual Insurance Company 

What the firms reportedly have in common are their use of valuation reports from Mitchell International Inc. and Audatex, also known as Solera, to assess the actual cash value (ACV) of accident vehicles. According to the suit, the reports contain arbitrary and unlawful charges, including “projected sold” adjustments and “typical negotiation” adjustments which lower vehicle valuations and consequently reduce payouts to consumers.

“By relying on flawed and deceptive valuation methodologies, these insurers have created a system that profits off of undervaluing total loss vehicles, often at the expense of individuals who are already facing the burden of a significant loss,” says M. Steven Rastin, co-chair of the class actions practice group at Gluckstein Lawyers.

The lawsuit claims that both adjustments are based on outdated and inaccurate assumptions about the used car market. In particular the adjustments assume that buyers always negotiate a lower price than the dealer’s listed price. This, they say, is both arbitrary and misleading “and leads to inflated profit margins for insurers at the expense of policyholders,” the firm added in a statement about the class action lawsuit. “We allege that these insurers are using these adjustments as a way to artificially deflate the value of vehicles.” 

The adjustments, they say, are not reflective of either actual cash value or true depreciation. They add that the practice is contrary to generally accepted appraisal standards and methodologies, and also contrary to the used car industry’s pricing and inventory management practices.

The class action case continues, itemizing the deceitful representations that insurers allegedly make in presenting ACV figures to their clients, all of which they say results in a monetary loss to each insured and a corresponding gain to each insurer.

“The plaintiffs plead that no defendant automobile insurance policy or insurance statute permits an insurer to reduce a vehicle’s value on the basis of fictional, invented or arbitrarily assumed adjustments,” the case states. “These adjustments assume, without factual foundation, that all buyers can and do engage in price negotiation in the used vehicle market,” they write. “The plaintiffs plead that a negotiated discount off the list price is in fact highly atypical.” 

Quebec residents are excluded from this class action.