Anatomy of a Total Loss Insurance Claim


Ever wonder how to handle a dispute with an auto insurance company that has declared your car a total loss?  The insurance company offers you a “settlement” that is far less than you think your car is worth. Your kids are complaining, your spouse is unhappy, your relatives are still a pain, things at work are demanding and now you need to take on a frigging insurance company? “Not on your life!” you exclaim.

OK, but what if you can get $2,000 or $4,000 more than what they’ve offered? Ah,we might have your attention now. Recently, we went through the entire process of a total loss insurance claim with USAA.  It wasn’t fun, but we did it because we wanted to help others navigate these tricky seas. Our personal experience wasn’t necessarily fun or profitable, but it sheds some light on how the industry works and should arm you with some useful information for you. The insurers have a definite advantage BUT state laws give some leverage to insureds (that’s a legal term for YOU).   And we found a killer tool for California residents to use in getting a fair payout on a totaled car.

There are FOUR major steps to disputing a total loss insurance claim. We”ll take you through each of them and give you examples of what you need to do and say. And we’ll reveal to you the game that the insurers play. In this case, our friend’s 2005 Prius was smashed. She was not a fault. The insurance company offered her $10,600 for the car. We went on line and looked around for a 2005 Prius with 93,000 miles on it and couldn’t find any car for less than $12,000 that was comparable. So we knew right there that they’d undervalued her car by about $1400.


We hired an independent adjuster and paid contested USAA’s valuation. We went online and searched for “auto appraisal”. We found a number of companies local (in San Diego) and national. we spoke to a few of them but was most impressed with Jason with He was very helpful and, at the same time, discouraging. He explained that the process isn’t a fun one and that it would likely not be a profitable undertaking given the time and expenses.   But we moved forward and paid $350.00 for an independent appraisal.  We also found a very knowledgeable and honest appraiser based in Berkeley (but doesn’t appraisals throughout California) called Accurate Auto Appraisals.   Monte Sobrero is knows the business and he’s a resource for anyone who doesn’t know how to proceed.

We hired Jason and found that he was correct;   the case was likely a money loser.   In hindsight, we probably should have spent less on his appraisal as his findings didn’t matter so much. More about that later. But if you can find an auto appraisal company that will do an appraisal for $200 (and there are a few) then go for it. It allows you to go to Step 2.   But Jason’s firm did a good job and we found his honesty and availability to talk with me very refreshing.     For those reasons, we’d recommend him.


Armed with an appraisal from Auto Appraise for $11,900 , we contacted USAA and told them that we were contesting their offer.   We informed USAA that we’d be doing the negotiation for my friend.   They prompted hired some guy to do an “independent appraisal”. His name is Rick Alba.  He was courteous, professional and attacked with absolutely no conscience.   It was clear that he was a hired gun whose job was a come up with a low a price as he could with a straight face.    He conducted his appraisal and found that the car was worth $9,565.   Suggestion:  don’t play poker with this man.

So that’s the first part of the game. USAA offers an initial low appraisal that was $1400 low and then uses a mercenary appraiser who comes up with a figure even $1000 lower than USAA.   How did he do it? His strategy was to use low comps from auto wholesalers and private sellers — all of them were outside of the San Diego area.  In fact, half of his comps were from Northern California wholesale auto outlets. The other part of his strategy was to find flaws in the condition of the car. He found $1000 in “damage” that would need to have been repaired had a dealer tried to sell it. This, even though the USAA appraiser found no notable damage, deemed the car in good condition and added, rather than deducted, money for its condition.

So now USAA’s position was that the car was worth only $9565. What gives? Well, they are positioning the arbitration. Most all auto policies have clauses that require an insured (YOU) and the insurer to find a third-party appraiser/umpire/arbitrator to resolve a dispute between the two independent appraisers. That takes us to Step 3.


This is the really challenging part of the process. How to find an independent arbitrator? Knowing that most of the appraisers who work in the business rely upon the insurers for business, I created two conditions for any arbitrating appraiser:

1. He/She couldn’t get more than 50% of their revenues from insurance clients

2. He/She could not have arbitrated a dispute involving USAA for the past year.

USAA agreed to these conditions and offered three names. we contacted all three but found only one to be acceptable to me because he was fairly independent and did these arbitrations on a part-time basis. It was REALLY difficult to find three arbitrators who were independent of insurers and available. We finally found one man who agreed to do the arbitration as a favor to a mutual friend for $750 but he had to be pushed to agree to do it. The two other names we chose were very expensive private judges. (yeah, did you know there’s a huge private judge industry made up of retired court judges who make a ton of money arbitrating business-related cases for companies that don’t want to wait five years for their justice).

By the way, these arbitrators aren’t cheap.  Reid Carroll offered to do the hearing for $500, which was a pretty good price. It was to be split between USAA and myself, so it cost us $250.


Now that the toughest part of the process was over, I needed only to set up a date to meet with the arbitrator and USAA’s hired conscience-less appraiser. We did it all through e-mail. Reid was very responsive and we got the appraisal ‘hearing’ set up quickly.  He asked for copies of each of the appraisals in advance of the hearing.   A good sign.

Now, we needed only prepare the case. The biggest mistake that inexperienced litigators make is that they talk too much. I endeavored to limit my points to no more than three points. We put it all in writing (summarized on one page) and then added attachments of documents supporting my arguments.  You can read it here:  ARBITRATION SUMMARY   It turned out to be very useful to include an excerpt in that summary from state law about how to establish fair market value  (also referred to as “comparable value” or “actual cash value  (ACV)”.     We ended up referring to it twice in the hearing.

As you can see, we limited our arguments to two major points with four subpoints under each category. We handed to the arbitrator and USAA’s hired gun at the beginning of the hearing. It took  five minutes to verbally summarize this document. Then Mr. Hired Gun started talking and went on and on and on for about 30 minutes. It was all just a show — the arbitrator appeared largely disinterested but it turns out he was interested enough to ask some pointed questions — largely about the points we had in my document.  “Why all of the damage to the car when USAA’s appraisal showed the car in good condition?”  “Why the low, out-of-area appraisals when there were plenty of San Diego-based comparables?”    The arbitrator asked some tough questions:  it was clear he wasn’t buying Mr. Hired Gun’s schtick.

After about 40 minutes, the arbitrator indicated that prior to the hearing, he’d done his own evaluation. He found the car to have a fair market value of $11,300 — about $1100 more than Mr. Hired Gun. He split the difference on the “damage” to the car that Mr. Hired Gun claimed and suggested that $11,000 was a fairer number. Mr. Hired Gun reluctantly agreed.

At that point, we didn’t have to agree to the arbitrator’s finding. After all, we’d initially been offered $10,600, We’d spent $600 out of pocket on appraisals and arbitrators and a heckuva a lot of my time. Not a great deal. If we declined the arbitrator’s finding, then we’d have gone to Superior Court which would ensure that the process would be a money loser, as we weren’t going to get more than $11,900 for the car. We accepted, comforted by the thought that we’d blown Mr. Hired Gun out of the water — but then, he’s paid to get blown out of the water. That’s his role in this process.  Our big mistake, though, was not having the arbitration agreement made contingent upon the California Fair Claims Settlement Act.

STEP 5 –  The Killer Tool

We promised a killer tool and here it is:  the California Fair Claims Settlement Act.  It can be found at the California Fair Claims Settlement Practices Section 2695.8(c)   The crucial language in this state rule is:  “if notified by the insured within thirty-five (35) calendar days after the insured receives the claim payment or final settlement offer that he or she cannot purchase a comparable automobile for the gross settlement amount, the insurer will reopen its claim file.”   In essence, if you contact the insurer within 30 days of the settlement and inform it that you could not find an auto for that settled amount, you can compel the insurer to reopen the claim and pay you more.

If you go the arbitration route, be sure to clearly state that any settlement you agree to is subject to the California Fair Claims Settlement Act.  That way, if you seek to reopen the claim, the insurer can’t use the settlement against you.


  • USAA low-balled me by $1400 (about 12% of the total value of the car) and it cost me $200 out-of-pocket and probably close to 20 hours to prove it. In my case, the car was an old one, its value low and the difference between my appraisal and USAA’s probably wasn’t large enough to justify going through the entire process. However, if your car is newer and your insurer low-balls you by 10%-12%, then you might have a $3,000-$4000 difference. An out of pocket investment of $500-$600 may be very much worth your time.
  • On the last page of my Arbitration Summary, please note that my request for reimbursement includes money we’d spent on improvements to the car and a recent service (over $500) as well as taxes and other state fees. California law compels reimbursement of sales taxes and fees — but not all states do.
  • Contesting a Total Loss insurance claim is probably worthwhile if, for no other reason, it let’s the insurers know that you are onto their game.   USAA has a reputation in the industry of being among the worst.   But you can find out yourself by going to some of the local auto sales web sites and searching for comparable cars.    Within 30 minutes or so, you can determine whether your insurer is gouging you like USAA did or whether it is being fair.
  • Be sure to use the California Fair Claims Settlement Act.    It is as very powerful consumer tool available to California residents.

9 thoughts on “Anatomy of a Total Loss Insurance Claim”

  1. We recently had a poor total loss settlement experience with USAA. The vehicle was a 2004 BMW e46 M3 with a manual transmission and was destroyed by a DUI driver while it was parked in a middle-school parking lot. Every single comp supplied by USAA’s outside valuation company CCC1, which claimed to include manual vehicles we verified by VIN to be SMG (auto-manual). First they’d say “they are manuals,” then when we demonstrated that they were not, they’d say “it doesn’t make any difference in pricing.” In our market manual vehicles in condition similar to ours go for about $20-22k… the settlement was for $15,500. We supplied about a dozen comps and they were either ignored or dismissed as “too high.” Pretty disgusted with the way our claim was handled. We are in CA and are contemplating having them re-open the case, but regardless, we will definitely be exploring our other insurance provider options.

  2. I think this made a good point about being aware of the laws in your state. I’d imagine there are other places besides California that have similar laws. Overall, it seems like one of the best things you can do is to consult with an expert before taking the settlement.

  3. I think your case was a “tight” one only because of the low amounts involved. Most cases I see or the ones that typically go through umpires involve higher amounts and there’s definite money as well as emotion at stake. I think especially in California a total loss claim that has merit will be taken seriously if proper proof is supplied. I know when I prepare a report it is usually very specific and has certain unique items that pertain to the vehicle exemplifying its worth. As for out of the market area comps; I have seen comps that were undervalued out of the area as well. I guess the most important thing is the match up to the stated vehicle. When exact matches can be identified, than the case would most likely be the strongest. Sometimes a unique vehicle match can only be found out of area. Conversely, maybe the close area comps are not “like kind” to the vehicle at hand. I love helping people who have true rights in a matter and need simple facilitation to reach their goals. I mediate automotive cases routinely and prepare appraisal reports for total loss and diminished value throughout California at

    • Thanks for sharing your information, Robert. You’ve got some very good information at your website and I recommend that readers check it out. Two notes of warning: we are very familiar with JD Power Satisfaction studies and while they are not without merit, they do not address the negotiation stances taken by insurers in total loss claims. Generally, USAA is a well-regarded insurer. Our only cause for alarm in dealing with USAA has been the way in which they deal with customers with total loss claims.

  4. Dear Admin:

    I created a website for helping people vehicles being totaled. It is a free service. There are no ads or solicitation. It was born from my frustration with the insurance company and instead of ranting about how they operate I decided to give other people the same chance and success as I did, check it out.

    Robert Miller

  5. Hello- I was hoping someone could contact me about my vehicle’s value. I’m currently dealing with a total loss claim and my insurance company sent me a LAUGHABLE appraisal value.

    Any help is much appreciated.


    • Hi David. We strongly recommend that you use one of the auto appraisers to which we refer in the article. They aren’t very expensive and they’ll give you much stronger negotiating leverage with the insurers. Best of luck!


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