Has anyone dealt with a diminished value claim on your vehicle?
Answer:
Diminished value claims might just be the worst sort of claim to have to consider. They may also be the new frontier in claims work. Time was, this was unheard of but it is becoming more frequent, especially in metropolitan areas.
A couple things about these claims:
1. In my state, there is no law or court decision delineating when diminished value claims should be considered, nor a law or court decision offering guidance on how this should be valued. Laws regarding insurance claims tend to be fairly consistent so I would imagine the same holds true for most states. The only court decision of which I am aware (and my company researched this) is one from several decades back that simply stated the owner of a vehicle might be entitled to diminished value if the damage to property were significant.
2. Diminshed value is entirely speculative; it is reflective of the current market for your vehicle. This means that the reduction in market value of your vehicle is based upon the premise that the average potential buyer for a vehicle would rather buy an undamaged car than a damaged one. If your vehicle is a popular model, the market may allow for repaired vehicles to sell for much more than would be the case for an unpopular vehicle with damage.
3. Diminished value is defined as a loss in the amount you could get if you sold the car. But this is not a consistent amount. If you were already planning to sell the car when the accident occurred, the potential loss in value could be large. However, if you keep the car for the next five years, for example, the car will already have taken so much depreciation that there is no appreciable difference in value.
Similarly, if your car is a late model car that is maintained in such a manner that it would qualify for a dealer to resell as a "certified" used car, and you would have traded it in, the potential diminshed value claim could be greater. This is because dealers will pay a premium on trade in to get cars they can resell under their certified used car programs. One qualification for certified used programs is that the car must have no adverse history such as a wreck with significant damage.
4. This is a numbers game based on percentages. A significantly damaged car might be one in which the cost to repair the vehicle exceeded 25% of its value. This is due to a DMV rule in some states that owners of vehicles with damage in excess of 25% of their value, and which are 5 years old or newer, must disclose the damage to the vehicle when reselling the car. Car Fax has somewhat automated this such that cars more frequently show up as having an adverse history.
However, the 25% rule is not a hard and fast concrete threshold. Think about it. A Hyundai that is 4 years old might be worth only $5,000. At that level, 25% of its value would only be $1,250. Bump that car lightly and you could see repairs exceed $1,250 even though the damage could be invisible to the eye from 20 feet away. Conversely, a Mercedes might have a value in the neighborhood of, say, $50,000. At that level, 25% of value would be $12,500. Such a car could take a very hard hit and still not see $12,500 in repairs.
Common sense will tell you that someone shopping for that Hyundai would likely be less concerned about $1,300 in damages than someone shopping for that Mercedes with, say, $12,000 in damages.
5. Much of the uproar over diminished value claims comes from dealerships quoting a large amount in lost value. I have seen many such dealer quotes and, interestingly, they are almost universally in the neighborhood of $5,000, regardless of the car or amount of damage repaired. I have lately seen some dealerships and appraisers proposing that diminshed value should be equal to 25% of the cost of repairs. It's a nice formula but I don't know that 25% (or $5,000) neccesarily has any bearing on the individual vehicle's actual dimunition of value.
I can tell you that there are a lot of expensive parts on a car that require nothing more than a wrench to replace. Late model cars with High Intensity Headlamps are a good example. Headlamps could easily be cracked in a light front end impact. High Intensity Headlamps regularly cost $600 and up for the part alone. Replace the bumper, grille and both headlamps and you could have $2000 or more in damages for a very light impact.
6. Insurance companies total a lot of vehicles and the salvage of these vehicles enter a lucrative salvage/resell market. Many totaled vehicles are reconstructed by body shops and resold. This is entirely legal if the documentation for the vehicle reflects that it is reconstructed. Insurance companies have absolutely nothing to do with reconstructing vehicles but, as they are involved in moving salvage, adjusters are generally aware of local repairers and the potential market for reconstructed vehicles. I can tell you that reconstructed vehicles, if completed by qualified repairmen, can command a value equal to wholesale NADA values for that car. I can further tell you that even though dealers often quote diminshed value at about $5,000, the difference between wholesale and retail values for cars is generally not $5,000. Therefore, the actual dimunition of value is not likely to be anywhere near $5,000.
7. For what it's worth, my opinion is that DMV should eliminate the 25% rule and instead institute some sort of a guideline that differentiates bolt on parts from actual structural damage. If the only damage to the vehicle is to things that bolt on, there is no difference between a vehicle that is repaired and one that is not. Since the only reason diminished value even exists is because of the public perception that a damaged car cannot truly be put back to its pre-accident condition, an adverse vehicle history that would indicate dimunition of value should be related to structural damage.
*As to your specific case: No one here could give you an exact dollar figure for all of the reasons listed above. Diminished value is speculative but should be related to the make/model/year and mileage of the car, the cost of repairs, where and how the car was hit, what was repaired/replaced, the quality of the work and general reputation of the body shop that did the repairs and etc. If you do not feel comfortable attempting to negotiate a settlement for this with the insurance adjuster, you can hire an appraiser to assist you but you will pay this expense, not the insurer. As with all negotiations, gather as much information as you can and have reasons and documentation to support the amount you think is fair.
get gap coverage
You can check your policy, to see if it covers dimunition of value. All my auto policies that I've ever had, well, at least for the past 10 years, have excluded it. If it covers, you can try to put the claim in on your policy. If not, you can sue the other person in small claims court for dimunition of value - their policy probably excludes coverage for it under the liability section.
Even if you go to court, you'll have to prove dimunition of value, and that will be TOUGH, because if you go to a dealer, they do NOT give you a discount if the car has been in an accident. ie, if you have two 2005 Hondas, and one was in an accident, the other not, the price tag will NOT reflect that. So you've a tough row to hoe on that one!
IT's not generally a claim you can make. You have settled with the other driver thu his insurance company, that is the end
most insurance covers do not cover diminished value
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