How insurers calculate actual cash value on totaled vehicles directly shapes how much work stays in collision repair bays versus moving to salvage.
A new class settlement in Arkansas puts one specific mechanism, the "typical negotiation adjustment" applied inside Audatex valuation reports, on the record as legally contested. This follows a jury verdict that already went against State Farm.
State Farm has agreed to pay $15.6 million to resolve a class action alleging the insurer underpaid Arkansas policyholders for totaled vehicles by using a valuation method plaintiffs argued systematically undervalued their cars. A jury ruled in favor of approximately 37,000 Arkansas class members in June 2025, finding State Farm violated its contractual obligation to pay actual cash value.
U.S. District Judge D.P. Marshall Jr. granted preliminary approval to the settlement on March 27, according to his order in Chadwick v. State Farm Mutual Automobile Insurance Co. The class covers Arkansas policyholders who filed a total loss claim between Nov. 29, 2016, and Oct18, 2021, and whose payout was based on an appraisal report from Audatex, Claims Journal reported April 20.
Policyholders will receive an average of $489 under the agreement. State Farm denies the allegations and stopped using Audatex in October 2021.
The repair-or-total-loss calculation
At the center of the Arkansas case is a line item called a "typical negotiation adjustment."
According to the complaint filed by lead plaintiff Rose Chadwick in November 2021 in the Eastern District of Arkansas, Audatex valuation reports pulled comparable vehicles listed online and then applied an approximately 9% downward adjustment to each one before arriving at actual cash value. Plaintiffs argued the adjustment does not reflect how used vehicles actually sell, where online list prices already account for competitive shopping pressure.
Chadwick's vehicle was declared a total loss in December 2020, and State Farm valued the claim at $4,121 using an Audatex valuation report. The suit alleged the adjustment practice violated proper appraisal methodology and the terms of the policyholder's contract.
In his preliminary approval order, Marshall wrote that "the use of the Audatex system was the common and predominant issue."
A pattern across state courts
The Arkansas settlement adds to a growing legal record on total loss valuation methodology, with similar cases targeting different insurers and different software platforms on the same underlying theory.
In 2024, Progressive agreed to a $48 million settlement with a class of 93,000 New York drivers who alleged the insurer's use of WorkCenter Total Loss software applied an improper 6.5% "projected sold adjustment" that systematically underpaid claims. Plaintiffs have pursued comparable cases against insurers in Washington, Illinois, Texas, and California, though outcomes have varied.
Two Progressive class actions in Pennsylvania failed in 2025 after a judge ruled underpayment claims could not be proven on a class-wide basis.
How valuations shape repair volume
For collision repair shops, the legal record matters because the methodology carriers use to calculate actual cash value directly affects which vehicles land on the total loss side of the line.
CCC Intelligent Solutions' Crash Course 2026 report, released in March, found total loss frequency reached a record 23.1% in 2025, which is a trend that continues to narrow the band of repairable work entering shops. A final approval hearing in the Arkansas case is scheduled for July 15, 2026.
