When a customer disagrees with an insurer's total-loss valuation, the path to challenging it just got narrower.
The U.S. Court of Appeals for the Six Circuit ruled April 24 that a class of roughly 90,000 Tennessee policyholders cannot pursue a collective lawsuit against State Farm over the company's use of a downward "typical negotiation adjustment" inside Audatex valuation reports.
The adjustment reduces the advertised prices of comparable vehicles in the valuation report on the assumption that used cars typically sell for less than asking price. This is now the sixth federal appeals court to reject class certification on this theory, joining the Third, Fourth, Fifth, Seventh, and Ninth Circuits.
Individual claims and appraisal
Class actions have historically been the mechanism that aggregates small per-vehicle disputes into financially viable cases. With six circuits now rejecting that path, a customer who believes their totaled vehicle was undervalued has two realistic options: invoke the binding appraisal process written into most auto policies or bring an individual lawsuit.
Settlements continue at the state level
The methodology itself remains in use. Insurers continue to apply algorithmic adjustments inside total-loss valuations, and individual and state-contained cases continue to move forward.
State Farm in March agreed to pay $15.6 million to settle a class action brought by Arkansas policyholders over the same typical negotiation adjustment at issue in the Sixth Circuit case — a settlement that survived in part because it was contained within a single state's policyholder pool. In 2024, Progressive paid $48 million to a class of 93,000 New York drivers over a similar adjustment in different software.
A California prosecutor sued Progressive, USAA, Mitchell, and CCC in April 2025 over alleged software-driven undervaluation, alleging the practice pushes repairable vehicles into the total-loss column. The complaint cited examples of valuations the prosecutor alleged understated vehicle values by $4,000 to $12,000.
The Sixth Circuit case has been remanded to the U.S. District Court for the Western District of Tennessee for further proceedings on Clippinger's individual claim. CCC Intelligent Solutions data put total-loss frequency at a record 23.1% in 2025, while repairable claims fell 9.7%. The share of repairable claims for vehicles six years old or newer dropped to 58.3% in 2025, down from 67% in 2020.
