State Farm has been using an internal pricing adjustment called the “Typical Negotiation Adjustment” (TNA) to systematically reduce payouts on totaled vehicles—and a growing body of litigation reveals the practice may have cost policyholders millions in underpayment. Through its third-party vendor Audatex (also called AudaExplore), State Farm applies an arbitrary flat-rate discount of 4% to 11% to vehicle comparable prices, ostensibly based on the assumption that dealership customers negotiate discounts.
In the Clippinger case out of Tennessee, the TNA applied was approximately 8.5% with no itemized explanation—a discount that can mean hundreds of dollars out of pocket for a policyholder expecting full replacement value on a totaled car. The story spans from Tennessee to Arkansas to six other states, with a major court decision pending that could affect tens of thousands of insurance claims.
Table of Contents
- How State Farm’s Typical Negotiation Adjustment (TNA) Reduces Your Payout
- The Tennessee Class Action and the Landmark Court Ruling
- The Arkansas Verdict and What It Means for Other States
- Identifying If You’ve Been Underpaid and What to Look For
- The Wider Litigation Landscape and Similar Cases
- What to Expect From the Upcoming En Banc Review
- What Happens If You’ve Been Underpaid—Your Options
How State Farm’s Typical Negotiation Adjustment (TNA) Reduces Your Payout
The Typical Negotiation Adjustment is a percentage discount applied to the comparable vehicle prices that Audatex uses to calculate your car’s actual cash value. Rather than basing your payout on the true market price of comparable vehicles at dealerships, State Farm’s system assumes that dealership customers negotiate down from sticker price and applies that assumption uniformly across all claims. This is an algorithmic adjustment, not a human review—it’s baked into the valuation software and applied automatically. The TNA discount ranges from 4% to 11% depending on the vehicle type and age. A 2011 Hyundai, for example, might see an 8% to 9% reduction applied to its comparable price.
On a vehicle valued at $4,700, that discount alone costs you $376 to $423. The problem: State Farm doesn’t itemize the adjustment or explain why a specific percentage was chosen for your particular vehicle. You receive a valuation report showing your car’s “actual cash value,” but the TNA is buried in the calculation methodology rather than shown as a separate line item you can challenge. The real-world impact became clear in the Arkansas case, where Rose Chadwick, a 30-year State Farm customer, was underpaid by approximately $600 on her totaled 2011 Hyundai. When she reviewed the claim, the difference between what State Farm paid and what similar vehicles were actually selling for came down to how Audatex had reduced the comparable prices. She challenged the payout and won—a jury agreed the adjustment was not justified.
The Tennessee Class Action and the Landmark Court Ruling
In 2019, Tennessee policyholder Nathan Clippinger filed a suit against State Farm alleging that the TNA was an undisclosed and unjustified reduction that violated Tennessee insurance law. His case alleged that State Farm was using an internal benchmark—the assumption that customers negotiate—without disclosing it to policyholders or proving that it actually applied to their specific vehicles. The case was certified as a class action, covering all Tennessee State Farm policyholders who received compensation for totaled vehicles based on Audatex appraisals with TNA reductions from May 8, 2019 onward. In October 2025, the Sixth Circuit Court of Appeals affirmed the class certification, which was a major victory for the plaintiffs. The ruling meant that thousands of Tennessee policyholders could now pursue the case as a group rather than individually.
However, the litigation remains ongoing, and in February 2026, the Sixth Circuit announced it would conduct an en banc (full court) review on March 18, 2026, to reconsider the class certification decision. This means the entire appeals court panel will revisit whether the class should be allowed to proceed—a development that adds uncertainty to the timeline but also indicates the case is significant enough to warrant full court attention. The en banc review is scheduled to happen soon, which means a decision could come within weeks or months. If the full court affirms class certification, the case moves toward settlement negotiations or trial. If the full court reverses, plaintiffs would need to reassess their legal strategy. This is a critical juncture in the case.
The Arkansas Verdict and What It Means for Other States
While the Tennessee case made its way through appeals, an Arkansas jury delivered a clear verdict in June 2025: State Farm was wrong to underpay claims using the TNA method. The lead plaintiff, Rose Chadwick, had a straightforward complaint—she owned a 2011 Hyundai that was totaled, State Farm paid her $4,100, and she believed the vehicle was worth closer to $4,700 based on comparable sales. The jury agreed, finding that the $600 underpayment was the result of State Farm’s improper valuation method. More significantly, the Arkansas judgment covers approximately 37,000 other plaintiffs who faced similar underpayment issues through the same Audatex system.
This single jury verdict demonstrates that courts are willing to find State Farm liable for the TNA practice and to award damages to a large class of affected policyholders. The jury’s decision validates what class action plaintiffs have been arguing: the TNA is not a transparent, disclosed adjustment that policyholders agreed to, and it’s not justified by individualized market analysis. The Arkansas case is important because it shows the practice can be challenged successfully outside the class action context. If you were underpaid on a totaled vehicle claim and have evidence that comparable vehicles were selling for more than State Farm paid, you may have grounds to pursue a claim similar to Chadwick’s. However, note that individual lawsuits can be expensive and time-consuming—the class action approach is typically more efficient if you’re eligible.
Identifying If You’ve Been Underpaid and What to Look For
The first step in determining whether the TNA affected your claim is to review your State Farm appraisal or valuation report. Look for the following red flags: (1) Does the report mention “Audatex,” “AudaExplore,” or any third-party valuation vendor? (2) Are the comparable vehicles listed at retail prices that seem high compared to the actual cash value State Farm paid you? (3) Is there a line item or note explaining a discount or adjustment to those comparable prices? If you see comparable vehicles listed at $5,000 but State Farm paid you $4,600, the missing $400 may have been due to the TNA or another undisclosed adjustment. You can compare State Farm’s valuation against independent sources. Check Kelley Blue Book, NADA Guides, or actual listings on Autotrader or classified ads from around the time your vehicle was appraised. Look for vehicles of the same year, make, model, mileage, and condition as yours. If you find that comparable vehicles in your area were genuinely selling for more than State Farm paid, you have evidence of underpayment.
Keep in mind, however, that some variance between different valuation services is normal—a difference of 5% might be within acceptable range, but a difference of 10% or more suggests something is wrong. Your claim documents should include the Audatex report itself (not just the summary). Request it from State Farm if you don’t have it. The report will show the comparable vehicle prices before and after adjustments. If you spot the TNA or any other adjustment that wasn’t explained to you, document it carefully with screenshots or printouts. This is your evidence if you decide to pursue a claim or join a class action.
The Wider Litigation Landscape and Similar Cases
State Farm is not facing this challenge only in Tennessee and Arkansas. Similar class action lawsuits have been filed in Alaska, Illinois, Kentucky, Mississippi, North Carolina, and West Virginia—all alleging that State Farm used automated pricing models to systematically underpay totaled vehicle claims. Each case alleges the same core problem: an opaque, undisclosed adjustment that reduces what policyholders receive compared to what their vehicles are actually worth in the market. This multi-state pattern is significant because it suggests the TNA practice is not a local or isolated issue. The same Audatex software is used across all State Farm regions, which means the same algorithmic discount is being applied to thousands of claims nationwide.
If State Farm loses in one jurisdiction, it may face cascading liability in others. Conversely, if State Farm prevails in some cases while losing in others, we could see a fragmented legal landscape where policyholders in some states have a clear remedy while those in others do not. However, be aware that class actions take time to resolve. Even with favorable rulings like the Tennessee class certification or the Arkansas jury verdict, settlements or final judgments can take years to finalize and distribute. If you believe you were underpaid and want to pursue a remedy sooner rather than later, you may have options to file an individual claim or appeal your original State Farm decision directly—actions you can take while class litigation continues.
What to Expect From the Upcoming En Banc Review
The Sixth Circuit’s decision to conduct an en banc review of the Clippinger case means that instead of a three-judge panel, the entire appeals court will reconsider whether the class certification should stand. This is unusual and indicates that at least some judges believe the original panel’s decision warrants full court review. The review is scheduled for March 18, 2026, which means a decision could come shortly after. The en banc review could go either way.
The court might affirm that the class should be certified and proceed, which would strengthen the plaintiffs’ position and move the case toward settlement or trial. Alternatively, the court might reverse the certification and require individual lawsuits instead, which would be a setback for the plaintiffs but not the end of the road. Even if the Tennessee class certification is reversed, the Arkansas jury verdict and the cases in other states would continue independently. The en banc decision will likely clarify the legal standard for certifying similar classes nationwide, affecting litigation in the other six states with pending suits.
What Happens If You’ve Been Underpaid—Your Options
If you believe State Farm underpaid you on a totaled vehicle claim, you have several options. First, you can file a complaint with your state’s insurance commissioner or department of insurance. These agencies investigate consumer complaints and can pressure State Farm to review questionable claims or provide refunds. This is a free option and often the fastest way to get a response, though results vary by state. Second, you can pursue the claim through a class action if you’re eligible. The Clippinger case in Tennessee covers policyholders whose claims were adjudicated between May 8, 2019, and the present.
If you live in Tennessee and meet those criteria, you should monitor the case status to learn how to register your claim once a settlement is reached. Similar timeframes and eligibility criteria will apply to cases in other states. Information about pending class actions is typically available through legal websites or the courts managing the cases. Third, you can consult an attorney about filing an individual claim or appealing State Farm’s original decision. Some attorneys specialize in insurance claims disputes and work on contingency (meaning you don’t pay upfront). An attorney can review your appraisal, compare it to market data, and help you present a demand for payment or negotiate a settlement with State Farm. This approach is slower but gives you direct control over your claim and may result in a faster resolution than waiting for a class action to settle.