diminished value

Posted: Mon May 25, 2009 01:59 am Post Subject:

I know that I have received a diminished value settlement from State Farm Auto Insurance in the past, but I was not the insured. It was their insured's fault and they almost totalled my car. I received a couple thousand dollars, and truth be told...I was like you. It never crossed my mind until someone at the body shop made a comment about how unfortunate it was that I had a nice vehicle and now would have a harder time selling it!

Posted: Mon May 25, 2009 11:57 am Post Subject:

she vounteered that I could call back when repairs were complete to discuss "diminished value.

Posted: Mon May 25, 2009 01:24 pm Post Subject:

Thanks. It's a 2008 Nissan Frontier with about 35,000 miles on it, bought new about 14 months ago. Seems like the "drive off" price was about $24,000. There's a dent maybe 10 inches in diameter in the far left corner of the bumper. The quarter panel was slightly buckled in and, further toward the cab, slightly bowed out. There's a very small dent in the cab, where the uppermost part of the bed was shoved into it. I'm concerned about what kind of bumper they're going to put on it. Seems to me you would have to have an engineering background to fully appreciate the differences between oem and aftermarket bumpers. As for "dv," maybe I'll ask the adjuster how much the fact of this accident would reduce her assessment of acv, were the truck to be stolen, heh.

I'm a former adjuster, but I don't know beans about physical damage.

Posted: Mon May 25, 2009 06:13 pm Post Subject:

I'm concerned about what kind of bumper they're going to put on it

As for "dv," maybe I'll ask the adjuster how much the fact of this accident would reduce her assessment of acv, were the truck to be stolen, heh.

I'm a former adjuster, but I don't know beans about physical damage

Posted: Mon May 25, 2009 08:15 pm Post Subject:

What has aroused my curiosity is that they brought up "dv" in the first place. Having sifted through some of the legal argumentation, I'm left with the impression that the policy language relied on by insurers in first-party cases may be inapplicable to third-party claims. This seems acutely problematic when aftermarket parts are placed on the vehicle of a third-party claimant who is insisting on his common law right to be "made whole." On the other hand, it's not immediately apparent how third-party claims might be cobbled into monster class action lawsuits. Except, maybe, umpd claims. I suspect that may be the only area where State Farm is being so "proactive."

Posted: Mon May 25, 2009 08:57 pm Post Subject:

Here's the skinny of DV in Texas first party with uninsured and underinsured property damage coverage.

COMMISSIONER´s BULLETIN NO. B-0027-00

--------------------------------------------------------------------------------

April 6, 2000

TO: ALL COMPANIES, CORPORATIONS, EXCHANGES, MUTUALS, RECIPROCALS, ASSOCIATIONS, LLOYDS, OR OTHER INSURERS WRITING PROPERTY AND CASUALTY INSURANCE IN THE STATE OF TEXAS AND TO OTHER AGENTS AND REPRESENTATIVES AND THE PUBLIC GENERALLY

RE: PAYMENT OF DIMINISHED VALUE TO POLICYHOLDERS

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:

Actual cash value of the stolen or damaged property;
Amount necessary to repair or replace the property with other of like kind and quality; or
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

I was able to file a diminished value claim here in Texas only after I paid a certified appraiser $500 to render an opinion on the actual loss in value. The event that necessitated the claim was a hit and run at 60mph on a freeway here in Houston. The police were never able to find the *&%%$ that hit my wife. The Uninsured/Underinsured part of the policy covered all damages to the car ($14,450+...nope it wasnt a Max) and medical claims, but I had to remind the insurance company that indeed they were going to payout on the diminished value. One hitch to all this was that any and all claims could only total the maximum amount of coverage for property damage...in this case it was 25k, so I was able to recoup about another $8500 in diminished value. I now carry no less than 100k for property damage. What is really sickening about the whole event is that even the BMW dealership that preformed ALL the repairs would NOT take the car as a trade in!!! Now THATS diminished value!!!

Posted: Tue May 26, 2009 12:11 am Post Subject:

Thanks. There's an interesting discusion of Texas authority on this business, including the reg you reference, in a note by Kevin McGillicuddy of Parker & Associates. (I've met Kevin a time or two, and I think he's a lawyer.) (Google "Parker diminished value".)

I I can't put my hands on my policy, but I seem to recall that the collision and comp coverages were recently endorsed to permit aftermarket parts in repairs.

There's a note on fatwallet.com (Check Arrived!) where a Texas lawyer is complaining, in a comment dated 5-9-09, that State Farm, whose insured rear ended him, "flatly denied" his "dv" claim. I surmise from this that State Farm has not swung the gate open to all third-party claims.

Posted: Tue May 26, 2009 12:17 am Post Subject:

Slipped my mind to mention that CAPA, according to its website, doesn't "certify" metal bumpers.

Posted: Tue May 26, 2009 09:18 am Post Subject:

Hi flint,

This seems acutely problematic when aftermarket parts are placed on the vehicle of a third-party claimant who is insisting on his common law right to be "made whole."

On the other hand, it's not immediately apparent how third-party claims might be cobbled into monster class action lawsuits.

I I can't put my hands on my policy, but I seem to recall that the collision and comp coverages were recently endorsed to permit aftermarket parts in repairs.

Posted: Tue May 26, 2009 10:52 am Post Subject:

I can't put my hands on my policy, but I seem to recall that the collision and comp coverages were recently endorsed to permit aftermarket parts in repairs.