One of the perks of being assigned to the Coast Guard in 1969, besides my adventuresome deployment to Antarctica, was qualifying for USAA insurance. At that time, and for many years thereafter, I thought USAA was the best of the best. Sadly, that no longer seems to be the case. The average guy in a military service does not make that much money which makes them particularly vulnerable when their car is totaled and they need to rely on USAA to give them the money they need for a replacement vehicle. The following saga will give readers an idea of what they can expect from USAA and, if they can afford to persevere, how they might eventually prevail.

On September 28, 2016 I was lucky to walk away from a near head-on collision when a truck suddenly turned left in front of me as I was cruising through a major intersection. I knew I would not be held liable for the accident because I had the right-of-way. When I spoke with USAA they told me that my thousand dollars deductible would be waived because the accident was not my fault. My car was towed to a local body shop that turned out to be one preferred by USAA.

Several days later I was informed by USAA that my car was considered a total loss. This left me with two options. I could have USAA pay to repair the car, but then the car would have a “salvage title,” meaning the resale value of the car would be substantially less, or I could buy new car. It didn’t strike me as being much of a choice. I started shopping for a replacement vehicle.

My USAA insurance policy declared that I was covered for the “Actual Cash Value” (ACV) of my vehicle. Since the basic idea behind insurance is to “make one whole,” I assumed actual cash value meant I would receive the actual cash I needed from USAA to buy a vehicle comparable to the one I lost. USAA quickly made it clear to me that they interpreted “Actual Cash Value” as meaning something quite different— something much closer to the wholesale value of the vehicle. They made it very clear that they would not reimburse me for the typical retail price of a car sold by a dealer. Since car dealers do not sell their vehicles for wholesale prices, I knew I was in trouble. I argued, “If I had theft insurance with you and someone stole my TV, would you expect me to go to a store and demand that they sell me their TV at a wholesale price?” They essentially told me, “It’s not the same thing.”

After doing some research I found that on average the dealer price for an exact replacement of my vehicle— a 2014 Infiniti Q 50— was about $29,000. I couldn’t find any vehicles like mine for sale by private sellers.

On October 11, 2016, I received a letter from USAA stating that they had determined that the actual cash value of my vehicle was $24,632 plus a California sales tax of $2,216.88. Two days later they sent me another email confirming that figure, along with the documentation supporting their conclusion, from and evaluating agency they use called CCC1. CCC1 quoted the sales information on twelve supposedly comparable vehicles. The problem was that only one of the twelve vehicles had the upgrades my car had. It was not an ‘apples to apples’ comparison.  Also, the data they provided was from the Department of Motor Vehicles database, which I could not access. Consequently, I had no way of knowing the condition of the cars sold. For all I knew, half of them could have been salvage vehicles. In any case, the average sold price, not listing price, of the vehicles described was $26,729 (11 of the 12 vehicles had been sold.) So how did they come up with an evaluation of $24,632? I could accept the notion that used cars are generally worth less than a dealer’s listing price, but the price for which they actually sold was I thought a good indication of their true value. CCC1 somehow concluded that the true value of these sold the vehicle was significantly less. There average downward “adjustment” for these sold vehicles was $1,998, which was the main figure they used for downgrading the value of my vehicle. I thought, I guess they think all of the buyers were so stupid as to overpay by almost $2000.

I did some research on CCC1. They claim they can save insurance companies money by using their proprietary database. As far as I could tell, USAA was going to exclusively rely on the valuation data supplied by CCC1. USAA evidently was one of CCC1’s clients. I thought, Who would CCC1 rather keep happy, me or USAA? Call me a skeptic, but I was beginning to think that the system was rigged against me.

The other problem I had with CCC1’s evaluation of my car is that they described the condition of my car as being “average” in the six different categories they use— Mechanical, Tires, Paint, Body, Glass, and Interior. I spoke with USAA and told them that the condition of my one-owner, dealer-maintained car was somewhere between very good and excellent in all categories and should be reassessed accordingly. USAA told me that all cars in California are evaluated on three levels: “Below Average, Average and Exceptional.” They described “Exceptional” as essentially being showroom ready. They indicated that the condition of my car had been determined by a guy at the body shop. A USAA employee had not personally examined my vehicle.

I later spoke to the guy at the body shop who had evaluated my vehicle. He suggested that he had evaluated my car based on guidelines provided by USAA. He admitted that based on these guidelines maybe one percent of the cars he evaluated were “exceptional.” I began to think that this body shop that USAA had recommended might have a bias that did not favor me. In any case, categorizing my vehicle as “average,” rather than somewhere between average and exceptional, clearly favored the insurance company. Most companies, such as Kelly Blue Book and Edmonds allow for ratings between average and excellent.

When I later spoke with USAA, they suggested that this three-level criteria was approved by the State of California. I contacted the insurance division of the state of California and asked them if it was a matter of official policy that cars are evaluated per these three “low average, average, exceptional” criteria. They denied anything of the sort. The state official I spoke to said, “Ask them (USAA) what’s the insurance code that they are talking about.” I did and USAA could not provide me with either insurance code information or written proof that the State of California explicitly approves their three-level rating system.  I thought, Does USAA actually think that there rating system is fair?

One of the agents at USAA told me I could do research on my own to find comparable values for my car. If my data showed that CCC1’s values were unfairly low, they suggested that they then would make adjustments. Over the next month, I provided them with several sets of comparable values that they completely ignored. For example, I quoted them three comparable vehicles in my area with similar mileage selling for an average price of $30,844.

I thought I came to the perfect solution when I went to USAA’s own car buying service and quoted them only the good buys per their TrueCar Market Price Analysis. I later spoke with one of their agents and asked him why the value of my car could not be upgraded.  After all a “great price” for a vehicle comparable to mine per their TrueCar system was more than $29,000. The agent told me they could not accept values from their own car buying service because it was not available to everyone, yet he said he would not accept values from any other car valuation service, such as Kelly Blue Book or Edmonds, because those publicly-available services included a certain degree of dealer profit that USAA would not accept. I asked him if there was some other service he could recommend that I could use for an independent evaluation. He could not give me one. I thought, Like it or lump it, I’m going to be stuck with CCC1’s evaluation.

I later learned that if I wasn’t happy with the price USAA was offering, I could hire a certified independent evaluator to do market research and determine the comparable value of my car. I assumed I would have to pay for this person. But then I thought, It won’t matter what an independent evaluator determines if USAA won’t allow for a dealers reasonable profit.

On October 18, 2016 USAA upped their offer to $24,782 plus taxes. On October 19, they sent me a threatening letter stating that I had to approve their moving my car to a storage facility or “any storage charges incurred after October 24, 2016 will be your responsibility.” About the same time an agent called me and told me that I was going to have to pay the $1000 deductible because they had not yet received the Highway Patrol report showing that the other driver was at fault. Rather than wait for the report, they were reneging on their promise to not charge me the $1000 deductible. I was struck with how quickly they responded on issues that would cost me additional money versus how slowly or unresponsive they were to the numerous emails I was sending them. Meanwhile, I had to continue paying auto insurance for my stored vehicle. When the Highway Patrol report finally arrived, I was told I would not have to pay the $1000 deductible.

I later spoke with another agent who told me that I should not have been sent the threatening letter about storage fees because the body shop I was using was one where USAA could store cars indefinitely at no additional cost. I thought, It seems like they have a cozy relationship with this body shop.

On November 8, 2016 I finally received an ‘apples to apples’ valuation of my vehicle from CCC1 that included information on a number of other comparable vehicles. USAA offered $25,482 plus taxes. I continued to complain that this was not a fair price.

When I closely looked at the new list of comparables from CCC1, I noticed that there was one 2014 Infiniti Q50 that had similar features to mine, but with significantly less mileage. Surprisingly, CCC1 downgraded the value of this vehicle compared to mine when it should have been upgraded. Obviously, the data provided by CCC1 is not entirely accurate.

I had previously insisted that CCC1 provide me with data on cars that I could actually buy versus cars that had already been sold. I decided to try and buy the previously-mentioned vehicle with less mileage. To make a long story short, after an intense, hard-nosed negotiation with the dealer, I struck a great deal and bought the vehicle for $27,000. I insured the car with USAA before I drove it off the lot.

So now I had a decent car to drive and still owned my totaled car that was taking up space on the body shop’s lot. USAA could not use my car for parts or anything else until I gave them title to my car. I was not about to give USAA title to my car until they paid me the ‘actual cash’ I had paid for my replacement vehicle, particularly since I knew that I had bought a car for about $2,000 below market value.

I subsequently spoke with another USAA agent. By then it was apparent to them that I was not going to simply accept their last offer and stop pestering them. This agent arbitrarily, as far as I could tell, upgraded one aspect of my car’s value to the “exceptional” level. He bumped up the value of my car to $26,302 plus taxes. I thought, A low-level agent can make adjustments within CCC1’s parameters. Maybe a supervisor can do better.

On November 18, 2016, I was finally able to speak to a supervisor, Christopher Oppen. He basically said that USAA was complying with all state guidelines and was doing nothing wrong whatsoever. After a long discussion, he agreed to upwardly adjust my valuation by $698, ostensibly because I’d been a USAA member for forty-seven years. I assumed he had chosen that exact amount because he by then knew that I had already bought a car for $27,000. I agreed to accept that amount. It was still sixty-three dollars short of the ‘actual cash’ I had to pay (because of taxes), but I was not going to quibble.

Although I was finally satisfied with the results I had achieved, I remained unsatisfied with the intense effort— countless emails and phone conversations, etc.—it had taken me to get a fair settlement. I didn’t think the average guy expending a reasonable amount of effort would fare as well in a system that seemed to be decidedly tilt in USAA’s favor. I thought, The people who have served this country deserve better.

With the thought of clarifying USAA’s standard policy, I asked Oppen to tell me in writing what USAA really means by “Actual Cash Value.” On November 21 he sent me an email saying “USAA provides Actual Cash Value (ACV) which is what your car is worth minus profit the dealer turns for selling the vehicle above market value.” And the market value is what CCC1 determines. I called him back and asked if USAA could officially amend their policy using the definition he gave me. He said he would pass on this recommendation to upper-level management. When I last spoke to him on December 21, 2016 he stated that USAA would not be making any of the changes he had suggested. I was not surprised.

As far as I understand the law, insurance companies have a duty to make their policies crystal clear in terms of what they cover and what they do not. In my opinion, USAA’s definition of “Actual Cash Value” is misleading. Even if they amended their policy per the definition given by Mr. Oppen, it wouldn’t change how USAA operates, but it would give a clearer signal to people who buy their policy that they’re going to face a complex situation. If Oppen’s modified definition had been incorporated, I had hoped that it would lead to policyholders at least realizing that they cannot simply replace their totaled car by going to a car dealer, paying retail, and having USAA reimburse them for that amount.

A key portion of the definition given by Oppen deals with the “market value” of a vehicle. The legal definition of “market value” is the highest mutually agreed-upon price between the buyer and seller in a normal, non-urgent situation. I seriously doubt that the values provided by CCC1 are based on the highest prices in mutually agreed-upon sales between a buyer and car dealer.

In spite of the problems I’ve had with USAA, I still think there a better than average insurance company. But I no longer view them as being the best. In my experience, dealing with an insurance carrier about almost anything is difficult.  State Farm now has a higher approval rating in social media when it comes to automobile insurance, but they are only a half star better. Anyone who thinks that dealing with an insurance company is going to be simple, straightforward and satisfying is, in my opinion, naïve. But if you know how insurance companies operate, your chances of succeeding with them are much better. The bottom line is you will probably have to negotiate long and hard with them before you can get a fair settlement. Unfortunately, many people for many reasons are forced to settle for less.

In most cases, replacing a totaled vehicle involves dealing with a car dealership. Car dealers are professional negotiators. Unless someone is a hard-nosed and very knowledgeable negotiator, the car dealers are going to strike a better deal. One of things USAA could do to help their policyholders would be to assist car buyers in the negotiating process. It would save them money and make their policyholders happier.

In these days of social media, USAA is apt to lose market share if they do not upgrade their operations. The word about what they are doing eventually gets around. Apparently what USAA does in terms of under valuing a replacement vehicle is fairly common in the insurance industry, so much so that Liberty Mutual is now advertising that they guarantee to replace a totaled vehicle with a brand-new vehicle. Oppen told me that this is true, but it applies only to vehicles with less than 15,000 miles and involves paying an insurance premium. I told him that at least their parameters are clear.

The next time I buy a new car, I probably will pay the premium and buy a policy from Liberty Mutual. I like clarity. After my car is beyond 15,000 miles, I would switch to another insurance company— which ever one most highly rated at the time that probably would not be Liberty Mutual. A former employee of that company called them “Slippery Mutual.” In spite of its flaws, I think USAA is a better company. If they make a few changes, they might once again be the best.

In summary, I would advise the following for best settlement results:

1. If USAA claims they are following a state directive, check with your state’s Department of Insurance.

2. Closely look at CCC1’s data. It may not be accurate. Insist that they include cars you can actually buy, or reflect all the features your car has.

3. Do your own market research in order to determine a fair settlement value.

4. Assume you will be sending multiple emails and having multiple settlement discussions with different agents.

 5. Be patient. It may take a month or more before USAA gives you a more acceptable settlement offer.

6. Know that low-level agents can make some concessions, but larger ones can only be made by supervisors.

7. Don’t give USAA title to your totaled car until you have reached a satisfactory settlement.

8. If you’re not a skilled negotiator and you’re going to be buy your replacement vehicle from a    dealer, go with someone who is, or at least someone who is level-headed and objective. And by all means do good market research before you go to the dealer so you know the realistic value of the car you plan to purchase. If necessary, insist on using a computer at the dealer to do additional research, particularly if you end up buying a car different than the one you had   originally planed.

I wish you good luck.