Why Commercial Total Loss Claims Are Often Undervalued

A practical look at valuation gaps in commercial truck and heavy equipment claims

Commercial truck and heavy equipment total loss claims are rarely straightforward.
While the term total loss suggests a simple outcome, the valuation process behind it
often involves assumptions that do not reflect real-world replacement markets.

Business owners are often surprised to learn that insurer valuation reports may overlook
factors that materially affect value. Understanding why this happens helps explain why
valuation disputes are more common in commercial claims.

Limited Comparable Data

Unlike passenger vehicles, commercial trucks and heavy equipment do not trade in large,
standardized retail markets. Comparable sales are often limited, geographically dispersed,
or outdated.

Differences in configuration, use, and condition can materially affect value, yet these
differences are not always reflected in automated or vendor-driven valuation models.

Configuration and Use Matter More Than Age

Commercial assets are frequently configured for specific applications. Upfits, vocational
setups, attachments, and usage patterns can significantly influence market demand and pricing.

Two assets of the same year and model may have materially different values depending on how
they are equipped and used, even when age or mileage appears similar.

Rebuilds and Major Repairs Are Often Overlooked

Commercial trucks and heavy equipment are commonly maintained, rebuilt, or refurbished over
time. Engine rebuilds, transmission replacements, axle work, and hydraulic overhauls can all
affect remaining service life.

Insurer valuation reports may give little or no weight to these investments, particularly when
standardized depreciation models are used. When rebuilds and major repairs are ignored, the
valuation may not reflect the asset’s true condition or utility.

Why Appraisal Quality Matters

In commercial total loss disputes, the issue is often not disagreement over value, but whether
the valuation is adequately supported. Insurers and their appointed appraisers routinely
scrutinize how comparables are selected and how adjustments are applied.

Appraisals that lack clear methodology or documentation are often disregarded, which can delay
resolution or require additional steps such as umpire involvement.

The Role of the Appraisal Clause

Many commercial insurance policies include an appraisal clause that provides a structured,
policy-based method for resolving disputes over value. Each side appoints an appraiser, and
when agreement cannot be reached, an umpire may be used as a neutral decision-maker.

Because commercial assets often involve wider valuation ranges and fewer comparable sales,
appraisal clause disputes are more common than in passenger vehicle claims.