The Little Cost-Shaving That Affects Auto Policyholders Big Time

Craig Brewer’s car insurance company declared his 2021 Genesis SUV a total loss after an April 2023 accident in Charlotte, North Carolina. The insurer calculated the vehicle’s pre-accident value at $56,722 and offered the amount as a settlement. Brewer, though, believed the insurer had lowballed the value by almost $3,500, and he went to court to recover the difference.

Kevin Aguilar totaled his 2017 Honda Civic in an accident while driving in Boston. His insurer assessed the car’s value at $11,540.69, way below what Aguilar and his finance company believed was fair. They went to court to recover what they thought should have been $14,861.13.

Gina Signor had a similar dispute with her insurer, which declared the pre-accident value of her 2014 Lexus to be $17,966, excluding taxes. Signor went to the Florida courts, believing her Lexus was worth closer to the advertised price of similar cars: $19,937.

These accident cases, and hundreds more across the country, share one common factor. In every case, the insurers relied on CCC One, a software from Chicago-based company CCC Intelligent Solutions, to determine the value of vehicles declared total losses in accidents. And most auto insurers use CCC One’s Market Valuation Report to calculate the actual cash value of accident vehicles.

And in many cases, policyholders aren’t happy with the calculations’ results.

Using an AI-powered system

CCC says its advanced tools and technology, including AI-powered systems, are why so many industry leaders turn to the company. Its systems, the company says on its website, help “improve operations and create better customer experiences.”

But consumer attorneys, appraisers, and policyholders say CCC valuations are often significantly below what similar vehicles actually retail for. Sometimes the differences can be thousands or tens of thousands of dollars.

It’s impossible to find a single public count of all lawsuits involving CCC. But the company has been involved in nationwide class-action suits, private class actions, and at least one government enforcement action in its decades-long history.

Court outcomes are mixed.

Some decisions and regulators have allowed CCC‑style valuations as a permissible method, provided they’re grounded in comparable vehicle costs. At the same time, dissenting judges and plaintiffs argue that the methodology gives insurers too much discretion to push values below real market levels.

This split, combined with ongoing consumer complaints and new suits (including recent actions targeting major insurers for their use of CCC reports), continues to fuel the controversy around CCC One Market Valuation Reports.

Some call it a ‘nationwide scheme’

Michael Parsons is well familiar with CCC’s methods and issues and has an enviable track record when going up against national insurers and their appraisers. As CFO of Source One Financial Corp., an auto finance company, Parsons has battled dozens of insurers over their use of CCC evaluations in more than 1,000 cases over the past six years. He claims to have won each one.

“This is a widespread nationwide scheme,” Parsons said in an interview with Insurify from his Braintree, Mass., headquarters. “A CCC market evaluation report is specifically produced by one company only for the benefit of the insurance company. In fact, every report says on its face that it cannot be relied upon by anybody except the insurance company.”

Parsons has argued, in court, that CCC uses a “secret sauce” whose ingredients are known only to the company to arrive at its evaluation. He says it takes the value of “dealer-ready” comparable vehicles and applies “normal wear” to the accident car, reducing its value by up to 15% off the dealer price.

“What the insurance company will never disclose is what ‘normal wear’ means,” Parsons said. “But no one gets to see the guidelines. How do you argue with your car being defined as ‘normal’ unless you know what ‘normal’ means?”

Parsons and other litigants say insurers should use public information, such as data from J.D. Power (formerly NADA’s Used Car Guide), whose data and methodology are accessible and understood.

What’s next: Not going away

CCC’s attorneys, meanwhile, contend Parsons misleads the courts about the software company’s methods.

“Plaintiff asserts numerous misleading claims about CCC’s methodology and the services it provides,” said an emergency motion filed in a Massachusetts case. “He attempts to buttress the mischaracterizations with out-of-circuit case law in which CCC’s product was also at issue, but fails to disclose that that decision was overturned on appeal.”

But, Parsons says, insurers usually settle in the end once they realize he’s not going away.

“I’ve had $1,500 cases settle for six figures once attorney costs and other fees are included,” he said. “But I’m a pimple on the elephant. With more than 4 million total loss accidents every year, the insurers still save a lot by shaving a little off their evaluations.”