USAA trying to push claim to Total Loss

by delanok » Wed Mar 27, 2013 05:08 pm

06 Scion XB first party accident. USAA is insurer. Some inflating of the repair estimate to get to a total loss by adding fog lights which my vehicle does not have, etc. On the total loss valuation, then they attempted to undervalue the vehicle by $1300 using the fraud of under grading the condition of my vehicle while using CCC guidelines that apply to higher grades. State guidelines specify when a monetary settlement is made and repairs exceed 75% of fair retail value equals total loss. USAA sent a senior adjustor from 700 miles away to redo the repair estimate who took off $1000 of fake repairs and added back $1300 more, some of these questionable as well. They refuse to pay for a teardown estimate. Applying the less strict policy definition for total loss, I am below the total loss threshold by $700. Using the state guidelines, I am above the loss threshold by $40 of repairs. I have identified a source for CAPA repair parts that will reduce the repair estimate by $900, but USAA is hard set that this is a total loss. Since their total loss offer is still too low, I just want to have it repaired and submit the bill to USAA as long as it is below the state threshold and also below their repair estimate. Besides the potential for exeeding the estimate are there any pitfalls in this? I retain the title full and clear. Appraisal clause would be stymied by lack of agreement on umpire.

Total Comments: 17

Posted: Fri Mar 29, 2013 04:20 pm Post Subject:

What rationale did your friend use in his case? Did he sue after or before claim settlement?

I don't recall the exact details but it was over the baseline adjustment. USAA has CCC take comps but then the apply a "baseline" adjustment. They claim this is done as the insured's vehicle is less then the comp vehicles. His argument was that this is incorrect, that the comps are the market value and there should be no baseline deduction. He submitted comps and asked that the claim be paid. When it was not, he told them that the undisputed amount should have been paid and under state law he was entitled to interest. They paid the undisputed amount and interest. He then filed suit for the difference plus expenses/costs. Suit was filed in small claims court and USAA hired an attorney to attend (costing them way more then the claim). I think he asked for about $4,000 and was awarded that amount.

My mistake was letting them move the vehicle from my repair facility to the copart lot after the accident. I lost a lot of leverage when that happened. At the time I trusted them

Actually this offers no leverage as USAA would have sent you letter stating that they would not pay any storage fees on the vehicle. If you had left it there, it would not have changed anything other then you'd be stuck with any fees the shop charged.

My recommendation at this point is that you back up your comps with a formal demand for a dollar amount. I'd also point out that they are acting in Bad Faith in not paying the undisputed amount and demand that they pay this plus interest as allowed in your state (look up what the post judgement interest allowed is). Give them 20 days to pay that amount. Basically, you are setting them up for a small claims suit if you wish to file.

Posted: Fri Mar 29, 2013 04:58 pm Post Subject:

Will I have to go through with the appraisal clause before I file any small claim suit?

Posted: Fri Mar 29, 2013 06:33 pm Post Subject:

If there are any conditions outlined in the contract that you fail to perform, the case will get tossed for not having exhausted all your "administrative" appeals. Once you've complied with all aspects of the contract, then you are free to sue. However, you may want to read the contract, because some include language that requires you to give them 60 days' advance notice of any legal action. Miss on that one, and the case gets tossed.

If you want someone who knows how to read and understand insurance contracts to find these little "gems" to give it a look, feel free to scan and email a copy of the complete contract, including the DEC me using the link below.

As for my earlier comment about taking the total claim to court, tcope's example is a better route to take, because you get most of your money up front, and the smaller remnant then falls within the limits of the Small Claims Court jurisdiction -- so you avoid becoming entangled with legal fees and get to keep 100% of whatever you are awarded.

The insurance company will still send a "corporate officer" who just happens to be an attorney, as their representative. But the rules of evidence in Small Claims Court are much more relaxed and the judge is not going to let the attorney start spouting case law citations, leaving you on fairly even footing.

Posted: Mon Apr 01, 2013 02:15 pm Post Subject:

I will try to email the dec. page and policy tonight. Thanks.

Posted: Tue Apr 23, 2013 03:28 pm Post Subject:

Update: I mailed the demand for undisputed amount payment, and received a call today. This is a total loss settlement. In exchange for the undisputed amount, USAA is requesting the title to the vehicle. I just want to make sure it is ok to give them the title, and then proceed to challenge the valuation (specifically the baseline adjustment deduction) in small claims court as tcope mentioned his friend did. Is it ok to surrender the title, and am I required to surrender the title in exchage for the undisputed amount, or do I have other options? I am in Alabama.

Posted: Fri Apr 26, 2013 01:52 pm Post Subject:

You can give them the title so they can pay you. If they don't, then they should still pay you the undisputed amount. This then should be the amount owed less the salvage value. But you then should put this in writing. At the end of the day will you be keeping the vehicle? If not, let them take it and move forward with your dispute.

Posted: Fri Apr 21, 2017 07:21 pm Post Subject: Resolved - Follow Up Info

Just to follow up: It has been four years, and it looks like we will be settling for $1300 - the initial amount I claimed that USAA undervalued the total loss. I spend $166 in small claims filing fees. I learned alot along the way - I filed in small claims court, USAA delayed and delayed, but I did not care because I took your advice and requested the undisputed amount up front. Meanwhile the vehicle sat for 4 years rusting and losing salvage value in a Copart lot until the case is closed. USAA spent $$ on an attorney, first tried to force appraisal - which did not work - and in the end proposed mediation, which they then decided they did not want to pay for - and finally agreed to settle when I pointed out that even if I were to lose in small claims, Alabama allows the appeal to be heard de novo, and how easy it would be to show they breached the contract by declaring a total loss instead of repairing (using their own numbers) , so I would have another opportunity, in front of a more knowledgeable and receptive judge, with the option of a jury. I have some tips on fighting these total loss undervaluations that I would like to share:

Examine the insurance contract (your policy) for breach. If you only disagree with the amount paid you on your claim, expect USAA to invoke the appraisal clause in the policy.
In my case, USAA clearly violated the contract clause that dictates whether to repair or declare as a total loss. The insurance policy states: “We will declare your covered auto to be a total loss if in our judgment the cost to repair it would be greater than its actual cash value minus its salvage value after the loss”. Their own calculations showed cost to repair was less than ACV minus Salvage value.

If your only beef is over the valuation of your total loss, and you file in court, expect USAA to request the judge enforce the appraisal clause in the contract first. This will delay and may eventually derail your small claims case, but read on for tips on how to resolve this.

The Appraisal clause is USAA’s home turf. USAA has carefully constructed the appraisal clause language and procedures to their advantage. For more information, google and read “Salvaging the Total Loss Claim” by Stephen Ryan. Knowing this information is key: This is USAA’s playbook, and you can use it to your advantage.

If you are forced into appraisal by the court (or the insurance contract) your best strategy is not to play to win, (because the “game” is fixed) but to play to tie or delay. USAA will NOT let you win an appraisal, but if you understand their strategies, you can successfully delay appraisal for many months and/or derail it through a stalemate (tie) and proceed in court. You can force them to pay legal fees to their local lawyer while you proceed per se in small claims court at minimal cost. Why delay? If you have requested USAA pay the “undisputed” amount, then you can reasonably expect there is only a very small chance you will recover more. The real reason to delay is to make USAA’s financial strategy (the whole reason they undervalued your loss) unworkable. By now your “total loss” vehicle is sitting in some salvage yard (probably COPART) awaiting auction. USAA wants to sell it fast, to get the salvage value and minimize storage expenses. The vehicle can’t be auctioned for salvage until the claim, appraisal or lawsuit is finished. The salvage value of that vehicle (and demand for it) goes down every month while the age goes up. I was able to delay USAA’s sale of my total loss vehicle more than four years costing them hundreds of dollars. I also caused them hundreds of dollars in lawyer fees. I also recovered an additional $1300 in the settlement. I have succeeded in foiling their scheme to profit by undervaluing my total loss.

USAA’s Auto insurance appraisal clause is unfair to the policyholder. Do your own research, but my experience validates what others have written. NOTE: the appraisal clause DOES NOT require either party to use an unbiased appraiser OR umpire. This is key to USAA’s strategy. Expect USAA to attempt to force you to name your appraiser FIRST. There is no requirement you name your appraiser first. By forcing you to name your appraiser first, you are financially committed IF you hire an appraiser. Also, you will be outraged when you find out that USAA will be naming one of their own employee’s as their appraiser, so better to have you name your (paid appraiser) first. Appraisal strategy part A: delay, delay, delay. Force USAA to name their appraiser first. This can take months, because USAA really, really does not want to go first. Always deal in writing using snail mail. USAA must have a policy of waiting about 20 days to respond to any letter you send them. This is why you make them pay the undisputed amount of the loss up front. Use the same 20 day delay in responding to USAA and work USAA’s delay policy to your advantage to burn as much time as possible. Appraisal strategy part B: Once USAA finally names their own employee as their appraiser, challenge them. Tell them flat out that they cannot name their own employee as their appraiser (they tried this tactic when I named myself as my appraiser). 1. Ask them to name an independent appraiser. 2. Ask for the qualifications (competence) of their nominated appraiser (even their own employee). 3. Ask for a copy of their state adjuster license, 4. appraiser certifications, etc. etc. Ask each question one at a time in separate letters each requiring a response thereby dragging it out over several more months.

Once you hit a dead end on USAA naming their own employee as their appraiser (they won’t back down), name yourself or a confidant as YOUR appraiser. Expect USAA to claim that “you cannot act as your own appraiser”, or you are not qualified. This is a lie. If USAA can act as their own appraiser, using an unlicensed employee, so can you. Even lawyers routinely act as appraisers. As you will see later, you won’t really have to appraise anything. Expect several more rounds of letters while USAA and their attorney try to browbeat or otherwise convince you (or the court) that you cannot act as your own appraiser. There is a copy of USAA letter posted on a diminished value website where USAA specifically acknowledges policyholders can be their own appraiser. Find it and use it in court if necessary.

Got your free appraiser just like USAA? Ok, then on to the next step, agreeing (or more likely stalemating) on an Umpire. The contract requires that this happen BEFORE any appraising begins. USAA’s strategy is to convince you to use one of their “approved” umpires, usually some local lawyer whose firm they have financially supported. Note that USAA’s appraisal clause does not require a disinterested or competent umpire, so expect USAA to name lawyers and retired judges and others that have worked well for them in the past. You may use an umpire once in your lifetime, while USAA uses many over the course of a year. If you earn your living as a “disinterested” umpire, are you more likely to rule in USAA’s favor or in the policyholder’s favor, knowing that USAA will never use you again? I can’t make this any clearer: DO NOT agree to use any umpire USAA proposes. Instead do this: go online and find/propose an insurance consumer advocate or appraiser/public adjuster who specializes in working only with policyholders and not for the insurance industry. Many of these types know how USAA and other insurance companies operate and have even written about their tactics to educate the public. If you know an auto dealer, auto buyer or auto body repair shop expert, and they agree, put their name forth. It really doesn’t matter who you nominate because USAA will not agree to them, not ever. USAA wants to guarantee they will win by stacking the appraisal in their favor. Their employee appraiser will not agree with your appraiser on the value of the loss, thereby forcing it to the their favored umpire for a decision. USAA wants to assure themselves of a favorable outcome. USAA won’t agree to use one of the umpires you propose (propose one at a time using snail mail), and you won’t agree to use any they propose, then you have a stalemated appraisal process. IMPORTANT: the policy does not have a remedy for a stalemated appraisal process, so it becomes appraisal becomes null. Head back to court and lay out everything you have done to make the process work (very important), and how USAA has been unwilling to cooperate, and how the process does not have a contractual remedy for stalemate. You have now complied with the contract and are free to sue. USAA may ask the judge to “appoint” one of their favored umpires, usually a person well known to the judge. The appraisal clause (by USAA’s design) DOES NOT have any provision for a judge to name an umpire, so don’t let USAA’s lawyer try to convince the judge to name one of “their” umpires. If you feel bold, beat them to the punch and ask the judge to name one of YOUR umpires. The judge does not have the power to name an umpire and cannot overrule or rewrite the insurance contract. If USAA had wanted the judge to be able to name the umpire, they would have written it into the contract, just like they do in the appraisal clause in theirr homeowner’s policies. The insurance policy is a “contract of adhesion”, so any ambiguities are interpreted in your favor.

By now, if you have done everything above, you may have burned many months and several billable hours of USAA’s lawyer’s time. Meanwhile, your total loss vehicle will have been rusting away in some corner of COPART’s lot waiting. You may still win the lawsuit, or settle. Even if you don’t, you have succeeded in using USAA’s unfair tactics against them. It might cost you a couple hundred in court fees and postage to do so, but it will cost them a couple thousand, and if it happens often enough, perhaps things will change. A variation on this strategy would be to invoke the appraisal clause without the lawsuit, and delay, delay, stalemate, and then (optional) head to court, but watch the statute of limitations for filing does not pass.

If more people did this with USAA/CCC and others who undervalue total losses, then they would abandon this strategy.

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