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Getting the Diminished Value Back

By July 2, 2012Uncategorized

Your insurance company won’t give you the diminished value (DV) for your car. Your car is relatively new and the damage was extensive, so the DV is a fairly significant sum. You need that value back to cover your losses if you ever trade that car in. Unfortunately, you insurer is telling you that it is not responsible for repaying the DV on your vehicle. Is there anything you can do?
In short, the answer is yes. But first, do you really know what diminished value is? Diminished Value is that portion of a damaged vehicle’s value that has not been restored through the repair process, even after a quality repair with a guaranty. More specifically it is the amount by which the resale value of a repaired vehicle has been reduced simply because your vehicle now has an accident history. Basically, if your car were sitting next to an identical vehicle, same make, same model, color, mileage, etc., but your car had an accident history, a buyer is less likely to buy your car because of the history. So, even though your car was repaired and is in perfect working order, a buyer will not be willing to pay for the full value of the vehicle. The difference between what a buyer will pay and the actual value of the vehicle is known as diminished value.
So, back to the question: Your insurer doesn’t want to pay for the diminished value. What can you do about it? Recently, courts in more and more states have ruled that diminished value is a real thing and can affect the value of a vehicle to its owner. Courts in Georgia and California, among others, have ruled in favor of vehicle owners making claims to recover the diminished value of their cars. Take this quote from a decision (State Farm v. Mabry) made by the Supreme Court of Georgia:
Thus an insurer under a policy such as the one in this case has three basic options, to wit: (1) To replace the property with other of like kind and quality less depreciation and deductible, (2) pay the loss in money (the loss being the difference in the market value measured immediately before and after the collision), less any deductible, or (3) if the insurer elects to repair it may do so, but to the extent that repairs do not restore to the market value immediately before the collision, the insurer is obligated to compensate for the difference, the total liability reduced by any deductible. The insured must be made whole, except for any deductible, under any option.
Essentially, insurers ARE required to repay DV in some states. And the number of those states is growing. Speak with an attorney to learn more about the diminished value laws in your state. Don’t let your insurer cheat you out of your money.