NEW YORK, July 2 (Reuters) - Progressive agreed

to pay $48 million to settle a class action lawsuit accusing the

insurer of systematically undervaluing the claims of New York

drivers whose vehicles were wrecked.

A preliminary settlement of the proposed class action was

filed on Monday night in federal court in Manhattan, and

requires approval by U.S. District Judge Lorna Schofield.

Policy holders alleged that Progressive used third-party

software that underestimated what their vehicles could have been

sold for before they became total losses.

They said the software used adjustments that overstated the

impact of haggling, when the availability of prices online made

such negotiations obsolete.

This effort to "thumb the scale" artificially reduced

payouts, violating Progressive's policies and New York's general

business law, the policy holders said.

Progressive denied wrongdoing in agreeing to settle.

Neither the Mayfield, Ohio-based insurer nor its lawyers

immediately responded to requests for comment on Tuesday.

The settlement covers New York policy holders from July 28,

2015 to the present. Each member of the settlement class is

expected to receive a $335 check, court papers show.

Lawyers for the policy holders may seek up to $16 million in

legal fees.

The case is Volino et al v Progressive Casualty Insurance Co

et al, U.S. District Court, Southern District of New York, No.

21-06243.