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Diminished Value Reports

What is an Auto Diminished Value Claim, you may ask?

But the real Question is, who will buy my car after it was wrongfully wrecked and how I can recover the difference
in value?



After an accident, the insurance company is obligated to return the car to its pre-accident state. This is nearly impossible. The very act of being in an accident automatically reduces the value of the car and makes it more difficult to sell. The quality of the repair, however, has a great impact on the vehicle's future value.


Diminished Value is the reduction in a vehicle's market value occurring after a vehicle is wrecked and repaired. A reasonable person will not pay the same price for a wrecked, then repaired vehicle, as they will for a vehicle with no prior accident history.

After an accident, the insurance company is obligated to return the car to its pre-accident state. This is nearly impossible. The very act of being in an accident automatically reduces the value of the car and makes it more difficult to sell. The quality of the repair, however, has a great impact on the vehicle's future value.


Some insurance companies require you to go to specific car repair shops or to the dealer or they won't pay. Also, be sure to ask if insurance covers new parts or if the repair shop must use secondhand parts to save money. This could hurt you later on if you try to sell the car or try to get additional insurance on it.


People aren't as likely to purchase cars that have been in accidents due to the potential for future problems. There are now companies such as Carfax where people can obtain information about used cars using the VIN or Vehicle Identification Number to trace previous insurance claims. Many states also require owners to disclose the accident history to potential buyers.


Even though this psychological impact may leave a lasting impression on future buyers of the car, insurance companies only pay for its physical conditions. However, it may be worthwhile when placing a claim to also ask for compensation to covering possible diminished value when trying to sell the car.


See Our Blog Auto Diminished Value Claims at Blogger



First Party Diminished Value Law by States

Usually before you turn a lease in or trade in your vehicle, Insurance Companies report your loss to CarFax. Such an information can cost you thousands, why not recover the expense upfront?

Even if the repairs are proper, the vehicle will still lose value. To collect diminished value after a car accident, insurance companies usually ask for a diminished value report.

Texas Auto Appraisars Group reports are generated after an unbiased inspection and clear evaluation of your vehicle.

We usually recover between 15% to 35% of your value of your vehicle, our fee is well spent. High end vehicles drop immensely in price since a potential buyer that wants to invest $50,000 or more in a vehicle will rather spend an extra $5,000 for a clean vehicle than a crashed one.


Sample Auto Diminished Value Report

Price: $275.00



Texas Law in Regards to Diminished Value Claims
First and Third Party Claims: Texas Insurance COMMISSIONER´s BULLETIN NO. B-0027-00

PAYMENT OF DIMINISHED VALUE TO POLICYHOLDERS, FIRST AND THIRD PARTY CLAIMS DIMINISHED VALUE
UNINSURED, UNDERINSURED, HIT AND RUN DIMINISHED VALUE CLAIMS

The purpose of this bulletin is to clarify the position of the Texas Department of Insurance (Department) to admitted insurers writing private passenger automobile insurance and to the public on the issue concerning first party claims for diminished value.

When an automobile is completely repaired to its pre-damage condition, there is sometimes a question of whether an insurer is obligated to pay the first party claimant for the diminished value of the automobile. A policyholder may claim that the automobile´s market value after complete repair is less than its market value before the damage. The policyholder then claims that the insurer is obligated to pay for the difference in market value, which is referred to as diminished value.

The standard Texas policy for private passenger automobiles, adopted by the Department under Texas Insurance Code Article 5.06, provides that an automobile insurer´s contractual liability for first party claims for a loss to a covered vehicle under Collision or Other Than Collision (Comprehensive) Coverage is the lesser of the following three options, less any applicable deductible:

1. Actual cash value of the stolen or damaged property;
2. Amount necessary to repair or replace the property with other of like kind and quality; or
3. Amount stated in the declarations of the policy.

Option (1), to pay the actual cash value, applies when the insurer elects to declare the covered automobile a total loss. Option (2), to repair or replace, obligates the insurer to pay the total cost necessary to repair or replace property with parts of like kind and quality, minus any applicable deductible.

The position of the Department is that an insurer is not obligated to pay a first party claimant for diminished value when an automobile is completely repaired to its pre-damage condition. The language of the insurance policy does not require payment for, or refer to, diminished value.

This bulletin is not intended to preclude the use of loss of market value as a measure that an insurer and first party claimant may use to settle other disputes. For example, if an automobile was repaired properly but the vehicle still does not function as it did before the accident, the insurer and policyholder may agree to use loss of the automobile´s market value as a measure of damages to settle the dispute.

An insurer also may be obligated to pay a third party claimant for any loss of market value of the claimant´s automobile, regardless of the completeness of the repair, in a liability claim that the third party claimant may have against a policyholder. Further, an insurer may be obligated to pay a first party claimant under the uninsured/underinsured motorist coverage provisions of the policy, for any loss of market value of the first party claimant´s automobile, regardless of the completeness of the repair.

Questions regarding this bulletin should be directed to the undersigned at 512/322-3430.

Sincerely,

David Durden
Associate Commissioner
Property & Casualty Program, MC104-5A

DD:dh

For further information, contact: ChiefClerk@tdi.state.tx.us


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