Under Washington state law, unless you gave your insurer permission to search over 150 miles from your home, no, they cannot use cars from all over the country when trying to find comparables. Feel free to refer them to the insurance rule on this issue, which is known as WAC 284-30-391 ("Methods and standards of practice for settlement of total loss vehicle claims.")
And even if you are dealing with someone else's insurer, they still need to look for comparable cars in and near where the vehicle is normally garaged or parked.
If you have problems with this -- and you live in Washington state -- feel free to file a complaint with our office so we can help ensure that the rules are followed. If you live in another state, check with your state's insurance department.