TOTAL LOSS DISPUTES

How Insurance Companies Value Your Total Loss in Arizona

Typically, most large insurers in Arizona use outside valuation vendors such as CCC, Carfax, Autosource or Mitchell to assess total losses.
These systems allow the insurer to input your vehicle’s year, make, model, mileage, engine, options and other details.
The insurance appraiser can then make additions or deductions for mileage, optional equipment, prior damage and condition.

The primary factor in the valuation is the use of comparable vehicle sales or auction results to estimate what your vehicle
would have sold for just before the accident. Unfortunately, the insurance appraiser has significant discretion in choosing
which comparable vehicles to use—and that’s where problems often begin.

Common Problems With Insurance Valuations

Many Arizona vehicle owners are surprised to learn how easily a valuation can be skewed by the selection and adjustment of comparables.
Some of the most common issues include:

• Using high-mileage comparables:
  The appraiser may choose vehicles with much higher mileage than yours, then apply large mileage adjustments.
  This can produce a number that does not accurately reflect what your low-mileage vehicle would have sold for.
• Limiting the geographic search area:
  By restricting the search radius, the system may reduce the number of available comparables and ignore better matches
  in nearby markets.
• Using dissimilar vehicles:
  Sometimes the comparables are not truly similar in trim level, equipment, condition or configuration, which can
  undervalue your specific vehicle.
• Failure to recognize specialty vehicles:
  Specialty vehicles—such as diesel pickups, well-equipped trucks, or unique configurations—often hold their value better
  than standard models. If the appraiser treats them like ordinary vehicles, the valuation can be significantly too low.

In many cases, the examples chosen simply don’t measure up to your actual vehicle, and the resulting “market value”
does not reflect what you could have reasonably obtained in an open Arizona or regional market.

Arizona Total Loss Valuation Dispute Resolution

Total Loss Valuation Dispute Resolution — Call 772-359-4300

What Recourse Does an Arizona Vehicle Owner Have?

When faced with a total loss offer that seems unfair, Arizona vehicle owners have several options:

• Accept the lower settlement:
  This is the simplest option, but often leaves money on the table.
• Hire an independent appraiser:
  You can retain an experienced, independent appraiser to prepare a fair and objective valuation that reflects your vehicle’s
  true pre-accident market value.
• Consider legal action:
  In some cases, litigation may be appropriate, especially if the insurer refuses to negotiate in good faith.

Choosing the right independent appraiser is critical. Do your due diligence and research the company before hiring:

• Check reviews on sites such as BBB, Angie’s List, Ripoff Report, Pissed Consumer, etc.
• Determine whether the appraisal firm also works for insurance companies, which can create conflicts of interest.
• Be cautious of firms that actively solicit business from adverse insurers while claiming to represent consumers.

These conflicts can cost you far more than just a few dollars—your appraiser’s primary loyalty should be clear.

The Appraisal Clause and How It Works

Most auto insurance policies, including those issued in Arizona, contain an Appraisal Clause.
This provision allows both sides to hire their own appraisers when there is a dispute over the value of a total loss.

Typically, the process works as follows:

• You hire an independent appraiser to represent your interests.
• The insurance company hires its own appraiser.
• The two appraisers attempt to negotiate a fair settlement value.
• A common compromise is the median of the two appraisers’ valuations.

If the appraisers cannot agree, they each propose candidates to serve as an umpire. The cost of the umpire is usually
shared between you and the insurance company. If neither side can agree on an umpire, one may be appointed by a magistrate
in your county.

The umpire’s decision is typically treated as final for the purposes of the appraisal process, although you may still
have the option to pursue litigation if you believe the outcome is unjust.

Understanding the Insurance Company’s Business Model

It’s important to remember that the business model of all insurance companies is straightforward:
collect as much as possible in premiums and pay out as little as possible in claims.
This doesn’t mean every adjuster is acting in bad faith, but it does mean you should approach any total loss settlement
offer with a critical eye.

When you receive a total loss valuation in Arizona, compare it to real-world asking prices for similar vehicles and consider
whether an independent appraisal and the Appraisal Clause might significantly improve your outcome.

Additional Fees and Typical Costs

Additional fees you may incur include:

• $275.00 for representation in Appraisal Clause negotiations.
• Half of an umpire’s fee if an umpire becomes necessary.

On average, approximately 10% of Appraisal Clause cases proceed to an umpire.
Even with these additional costs, many Arizona vehicle owners still see a substantial net gain compared to accepting
the insurer’s initial offer.

Complaints Against Insurance Companies in Arizona

If you believe your insurer has acted improperly or in bad faith, you can file a complaint with the Arizona Department
of Insurance and Financial Institutions:

Arizona Department of Insurance and Financial Institutions
100 North 15th Avenue, Suite 261
Phoenix, AZ 85007
Phone: (602) 364-3100