USAA and First Party Claims
When you dispute a loss amount with USAA the matter is usually deferred to the policy’s terms and conditions, specifically the appraisal clause.
USAA Appraisal Clause
A. If we and you do not agree on the amount of loss, either may demand an appraisal of the loss. In this event, each party will select a competent appraiser. The two appraisers will select an umpire.
The appraisers will state separately the actual cash value and the amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be binding.
Each party will:
B. We do not waive any of our rights under this policy by agreeing to an appraisal
The fundamental problem is that USAA will assign the disputed file to an “in-house” appraiser instead of hiring an independent party.
Your 2 year old car is wrecked, the repair cost is $10,000, you file a first party claim with USAA, they fix your car and then send you a USAA DV Questionnaire to address the loss in value (most of the time they wait for you to ask for DV first).
The paperwork they send you is cumbersome, but let’s say you fill it out and send it back, wait a couple weeks and then get a response, $535! This amount is based on a hidden top secret formula USAA refuses to disclose. We have their formula, it’s some 17c hybrid they call “Evaluation Guideline Worksheet“.
Why does USAA hide their method? Simple, it’s erroneous!
In addition, their initial offers are usually non-negotiable. In order to collect what you’re fairly entitled to, you need to follow the appraisal clause language and hire your own competent appraiser. USAA’s initial offers are usually 30 cents on the dollar.
USAA demands that you send them a written appraisal and to invoke the appraisal clause in writing, a few weeks later one of their “appraisers” calls yours to negotiate. Keep in mind, they do NOT inspect your car a second time, they just call to negotiate. USAA expects you to provide them with written proof and an appraisal report but refuse to do the same, they want to pick apart your appraisal but never show theirs! USAA DIMINISHED VALUE APPRAISAL LETTER
The negotiator, someone in their infamous DV department , Jeb for example, calls your appraiser to try to reach a settlement. The amount he is starting his negotiation with… that’s right…. the original $535. Basically a carbon copy of their original low ball amount thus defeating the whole appraisal clause process.
In reading the appraisal clause we notice:
- We and You are bold, these are the primaries. Gary falls under “we” since he works for USAA as a salaried employee.
- “Each party will select a competent appraiser”, since Gary is considered “we”, he cannot be the appraiser as well. It’s like you saying you’re your own appraiser!
- “The appraisers shall state separately”, Gary is Not SEPARATE from USAA, he is USAA furthermore he is recycling the same formula rejected by you in the first place prompting the appraisal clause.
- “Each Party will pay its chosen appraiser”, Gary is already a salaried employee of USAA and since “will” is a future act, this can only mean the appraiser is to be hired by USAA to conduct the appraisal.
The USAA in-house appraiser will never settle this claim with your appraiser for a fair amount. Forcing the matter to go to umpire, the problem with this scenario is: so far you’ve paid for 1 appraisal and they’ve paid for none so after hiring an umpire you would pay for 1 1/2 and them only 1/2.
To add insult to injury, they don’t agree to hire an appraiser as an umpire but a mediation lawyer who charges by the hour, adding unnecessary burden to the insured.
The umpire, will more than likely split the difference, mind you, its the difference between an erroneous value and a real appraised amount, after deducting your appraisal cost and the umpire cost, you’re left with a portion of the appraised value and that is NOT fair at all!
Reasons why we think USAA is unfair and deals in bad faith on DV Claims:
- They don’t hire an outside appraiser
- They don’t provide you with their appraisal report
- They recycle the original appraisal in the appraisal clause process
- The umpires they want to choose are biased
- The umpires they want to choose are too expensive
- They want you to pay for 1.5 appraisals and they only pay for 0.5
- Their in-house appraisers are biased (obviously, they are salaried employees of USAA)
- They want a copy of your appraisal report and refuse to provide theirs
- They prefer for the claim to stay open for months rather than settling in good faith
- Their employees are not well trained on DV claims
The bottom line is this, unless the appraisal clause in USAA’s policy is rewritten or unless USAA changes their claims practices to be more transparent and clear, most first party DV claims will go mishandled and more money will go missing from your pocket. USAA needs to stop handling claims in bad faith and start to properly compensate them for losses suffered.