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An Automobile Diminished Value Success Story

Updated on September 20, 2015

An Automobile Diminished Value Success Story

Many of us have heard about how an automobile loses much of its value after undergoing collision repairs. In insurance industry terminology, it's known as "diminished value" and insurance companies would rather not advertise the fact that we can collect for it. In Every state, with the exception of Michigan, recognizes third-party diminished value - that is -claims made against the other party when they are found liable for causing the loss. Only in Georgia, Kansas and Washington is a vehicle owner allowed to pursue a diminished value claim against his or her own insurance company.

Wikipedia defines diminished value as "the loss in a vehicle's value as a result of having been damaged." Franklin Colletta of The St. Lucie Appraisal Company in Fort Pierce, Florida advises car owners whose late-model vehicles were damaged by third-parties to vigorously pursue automobile diminished value claims against the responsible driver's insurer. "Although there are fair-minded insurance companies out there." says Mr. Colletta, "the vast majority of them will try every tactic in the book to reduce or even eliminate payments for diminished value. "In California, for instance, State Farm Insurance requires claimants to have their vehicles physically inspected by independent appraisers that prepare their diminished value reports. This, despite the fact that the quality of repairs has absolutely no bearing on the car's loss of value, also known as inherent diminished value. Defective or improper repairs fall under the category of repair-related diminished value and, obviously, those vehicles need to be inspected. Inherent diminished value simply means that because the vehicle now has a bad Carfax, it is, naturally, worth less in the eyes of both dealers and used-car buyers alike. What State Farm has done," Mr. Colletta goes on to say, "is to effectively deprive claimants of expert representation that may not be available in their geographical area." No other insurance company, and, indeed, not even State Farm itself in states other than California, forces this requirement upon its claimants. There are also insurers that practically force claimant's to pursue legal means in order to obtain fair and equitable treatment. A recent class-action suit in the state of Washington will require Farmer's Insurance Company to pay up to $48,500,000.00 for failing to pay for diminished value losses between 1993 and 2002.

In a recent case in Texas involving the owner of a new Porsche that was rear-ended by a teen who was texting while driving, the automobile diminished value report provided by The St. Lucie Appraisal Company showed that the vehicle had lost approximately $12,000.00 in value. This figure was based upon the opinions of six area Porsche dealers whose opinions ranged from $5,500.00 to more than $15,000.00. In attempting to negotiate with the insurance company, the owner of the Porsche told the insurance adjuster that he would be willing to accept $5,500.00 which represented the low-end of the dealer quotes. The adjuster, however, balked at this and tendered a low-ball offer of $600.00. Upon receiving this disappointing news, the vehicle owner sued for the full amount and ended up winning in arbitration, the full amount of $12,000.00+. In addition, the insurance company was required to pay an extra $675.00 as compensation for the expense of the vehicle owner having to hire St. Lucie Appraisal as an expert witness as well as the original appraisal fee of $225.00.

"Insurers don't like paying for lawyers any more than we, as private citizens do." Mr. Colletta goes on to say. "Defense attorneys hired by insurance companies are usually adept at identifying cases they would potentially lose, though and advise their clients accordingly. However, he continues, if claimants decide against vigorously pursuing diminished value claims with all of the resources available to them, their chances of receiving adequate compensation for diminished value are practically nil.

  1. Obtain a comprehensive automobile diminished value report based on dealer quotes
  2. Escalate the claim to the managerial level if necessary.
  3. Register unfair claim practices complaints with the insurance department in your state.
  4. If all else fails, file suit against the insurer in small claims court.

Then, your chances of receiving a fair settlement offer increase exponentially. One caveat: different states have different limits for small claims civil suits ranging from $2,500.00 to $25,000.00. Automobile diminished value appraisals can sometimes result in sums that exceed those limits. And, as was clearly demonstrated by Washington's Supreme Court, punitive damages may soon become part of the legal landscape in cases involving automobile diminished value and unfair claims practices.

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