Feeling Short Changed on Your Total Loss Offer? What the Chadwick v. State Farm Case Exposes
Feeling Short-Changed on Your Total Loss Offer?
What the Chadwick v. State Farm Case Exposes
When You Get a “Total Loss” Check and It Just Doesn’t Feel Right
If your car has ever been declared a total loss by your insurance company, you probably know the feeling. The letter arrives. The offer is laid out in what looks like a professional report. And then your stomach sinks. The number is lower than you expected. Maybe it is a few thousand dollars lower. Maybe you even said, “That cannot be right.”
You are not alone. Thousands of consumers across the country are finding themselves in this exact situation. You keep your vehicle well maintained, only to be told it is worth less than market value. It does not feel right because it is not right. And as it turns out, that gut feeling has legal backing.
One case, Chadwick v. State Farm Mutual Automobile Insurance Company, has pulled the curtain back on how these valuation reports are generated. The details of this case shine a spotlight on a system that too often leaves policyholders underpaid and misled. This article will explain how that happened, how many other insurers are using the same software, and most importantly, what you can do to protect yourself.
How Insurers Value a Totaled Vehicle
When your car is totaled, the insurance company is supposed to pay you what it was worth just before the accident. This value is called the Actual Cash Value, or ACV. Sounds straightforward. But how do they come up with that number?
Most insurance companies use third-party software platforms like Audatex, CCC Intelligent Solutions, or Mitchell. These programs analyze used car data, apply depreciation, and sometimes add adjustments to arrive at a final number. Unfortunately, many of these adjustments are neither transparent nor fair.
One such adjustment is called the “Typical Negotiation Adjustment.” It sounds like something based on common bargaining practices. But in reality, it is a built-in price reduction applied by the software that does not reflect any real negotiation at all. It is simply a way to lower the payout amount, often by hundreds or even thousands of dollars.
This means that even if you think your insurer is using a neutral report to value your vehicle, the tool behind it may be engineered to benefit the insurer, not you.
What the Chadwick v. State Farm Case Revealed
In the class action lawsuit Chadwick v. State Farm, policyholders accused State Farm of systematically underpaying total loss claims by using Audatex software that incorporated a deceptive “Typical Negotiation Adjustment.”
Here is what happened. When a vehicle was totaled, State Farm relied on a valuation report generated by Audatex. This report included a downward adjustment to the vehicle’s value based on an assumed negotiation discount. But the adjustment was not based on any actual market behavior or real negotiation. It was a pre-programmed deduction applied across the board.
In other words, the software reduced the settlement amount before the consumer ever saw the number. According to the complaint, this tactic led to undervaluations of 4 to 11 percent on average.
That kind of reduction might sound small, but on a car worth $20,000, it can mean a loss of more than $2,000 to the policyholder. Multiply that by thousands of claims, and you are looking at millions of dollars quietly shaved off what insurers owe their customers.
The Chadwick case argues that this adjustment was both deceptive and unfair. It was not disclosed, not based on real-world data, and not agreed upon. It was just quietly subtracted. And this tactic was not isolated to one claim. It applied to policyholders across multiple states.
Other Insurers and States Are Doing the Same Thing
State Farm is not the only insurer accused of using valuation software that shortchanges consumers. Several major carriers have been named in lawsuits alleging similar practices. These include GEICO, Progressive, USAA, and Allstate, among others.
What ties these cases together is a common theme. Insurance companies are relying on third-party software to create vehicle valuations, and those tools are built with undisclosed pricing adjustments that favor the insurer. These lawsuits argue that the resulting payouts are systematically lower than fair market value.
Here are just a few examples:
In California, lawsuits have been filed against GEICO for underpaying total loss claims by relying on flawed valuation tools.
In Texas and Florida, similar claims have been brought against Progressive and USAA.
In Washington, Allstate faced allegations that their software-driven valuations misled consumers and violated state insurance codes.
The problem is widespread. And it is important to understand that it is not limited to one insurer or one state. Consumers across the country are at risk of being underpaid when their car is totaled.
Why Independent Verification Matters More Than Ever
You cannot rely solely on your insurance company to determine the value of your vehicle. The Chadwick case shows that even the most reputable insurers may use methods that are designed to lower your payout.
That is why independent verification is so critical.
An independent total loss evaluation can uncover discrepancies in your insurer’s report. It gives you the power to challenge a low offer with real, market-based data. And the results can be significant. Many consumers who seek a second opinion discover that their vehicle was undervalued by $1,000 to $3,000 or more.
The reality is, most people do not even know they can question the offer. They assume it is final. But in most cases, it is not. Insurance companies will often re-evaluate a claim when presented with credible third-party evidence.
Getting an independent review puts the control back in your hands.
What You Can Do Right Now
If you have received a total loss offer that feels too low, here are the steps you can take today:
Request the full valuation report from your insurer. You have a right to see how they calculated your vehicle’s value.
Look for unexplained or unclear deductions, such as “negotiation adjustments” or line-item price reductions.
Get an independent total loss evaluation. Services like EstiVerify provide detailed reports based on actual market conditions and comparable vehicle listings.
Submit the independent report to your insurer and request a reevaluation of your claim.
Consider filing a complaint with your state’s department of insurance if the insurer refuses to negotiate or explain their deductions.
At EstiVerify, we specialize in helping consumers understand the real value of their vehicle after a total loss. Our detailed evaluations are based on current listings, vehicle condition, and regional pricing trends. We have helped thousands of people recover hundreds to thousands more from their insurers — not by being aggressive, but by being accurate.
We believe in transparency, fairness, and giving you the tools to stand up for your rights.
Final Thoughts: Do Not Accept the First Number
The Chadwick v. State Farm lawsuit has revealed something consumers have suspected for years. Insurers are not always transparent, and their systems are often designed to minimize payouts. But now you have knowledge, and knowledge is power.
If your car is totaled and the offer feels wrong, you are probably right. Trust your instincts. Take action. Get a second opinion. Fight for what your vehicle is truly worth.
You are not asking for more than you deserve. You are asking for what you are owed.
