How is an auto insurance company permitted to calculate the actual cash value (ACV) of an insured vehicle that is declared a total loss? The complaint alleges that American Standard Insurance Company of Ohio underpays its insureds in the event of a total loss by improperly subtracting what it calls a “typical negotiation adjustment.”
The class for this action is all Georgia citizens insured by American Standard Insurance Company of Ohio who, from the earliest allowable time through the date of resolution in this case, received a first-party total-loss valuation and payment on a total-loss claim that included a “typical negotiation” or similar adjustment.
According to the complaint American Standard uses the third-party vendor Audatex or AudaExplore to help it determine the value of vehicles that it declares total losses, using a system called Autosource Market-Driven Valuation. The Autosource system finds comparable vehicles sold or listed for sale online in the appropriate market. But instead of simply reporting the prices, the complaint alleges, it applies an arbitrary “typical negotiation adjustment” that lowers the vehicle values by 4% to 11%.
The complaint calls this adjustment “baseless:” “The ‘typical negotiation adjustment’ is not based on any negotiations, typical or otherwise, and is not based on any market realities. … This percentage reduction artificially reduces the total-loss payment for the totaled vehicle and, with the sliding percentage scale, ensures that every total loss payment [American Standard] makes to insureds is significantly, but unconscionably, reduced.”
American Standard’s policies do offer a way for customers to disagree with the company’s determination of the ACV. According to the complaint, it requires that the company and the customer each hire an appraiser and share the cost of an umpire to make the final decision. The complaint alleges, “Since the amount by which the insureds’ total-loss claims are underpaid is likely less (or only marginally greater) than the cost of the appraisal, [American Standard] knows and intends” that customers will not choose this process and will instead accept whatever figure the company offers.
The complaint alleges that the “typical negotiation adjustment” is a sort of average between the price a dealer lists for a vehicle and what the dealer would actually be willing to sell the vehicle for. According to the complaint, “it is increasingly the practice in the used car market to avoid price negotiation by implementing ‘no haggle’ pricing, particularly as to internet-posted prices.” Also, because of recent supply-chain problems, the complaint claims that vehicles are often being sold now for higher prices than those posted.
Article Type: LawsuitTopic: Insurance
Most Recent Case Event
American Standard Insurance of Ohio “Typical Negotiation Adjustment” Georgia Complaint
April 7, 2022
How is an auto insurance company permitted to calculate the actual cash value (ACV) of an insured vehicle that is declared a total loss? The complaint alleges that American Standard Insurance Company of Ohio underpays its insureds in the event of a total loss by improperly subtracting what it calls a “typical negotiation adjustment.”
American Standard Insurance of Ohio “Typical Negotiation Adjustment” Georgia ComplaintCase Event History
American Standard Insurance of Ohio “Typical Negotiation Adjustment” Georgia Complaint
April 7, 2022
How is an auto insurance company permitted to calculate the actual cash value (ACV) of an insured vehicle that is declared a total loss? The complaint alleges that American Standard Insurance Company of Ohio underpays its insureds in the event of a total loss by improperly subtracting what it calls a “typical negotiation adjustment.”
American Standard Insurance of Ohio “Typical Negotiation Adjustment” Georgia Complaint