Your Comprehensive Guide to Successfully Pursuing Diminished Value Claims
At Diminished Value Method, LLC, we are committed to empowering you with the knowledge you need to successfully pursue your diminished value claim. Below is a list of the most frequently asked questions about Diminished Value. If you have any additional questions, please don’t hesitate to reach out to us
What is diminished value? What does diminished value mean?
Diminished value is the decrease in worth that a vehicle experiences after being involved in an accident. Consumers are not willing to pay as much for a vehicle that has a history of being in an accident as they would for a vehicle that was not in an accident. The difference in the vehicle dollar value after the accident as opposed to before the accident would be the amount of diminished value. Since the vehicle is now worth less as a direct result of the accident, the owner should be compensated for the loss.
Why should I care about diminished value?
If you’ve been in an auto accident, there’s a high probability that the vehicle is now worth less and you should be compensated for that loss. It’s better to experience the satisfaction of being reimbursed for the decrease in value now, than to feel the frustration of losing money down the line when you decide to sell or trade-in the vehicle.
What is inherent diminished value?
There are different types of diminished value. Inherent diminished value is the automatic loss of market value to a vehicle simply due to the fact that it has been involved in an accident. It can be described as the amount a vehicle is perceived to have decreased as a result of an accident.
What is repair related diminished value?
Repair-related diminished value is the decline in a vehicle’s resale value due to subpar repairs, categorized into two types: Insurance-Related and Shop-Related. The former results from insurance appraisal issues or forced use of inferior parts, while the latter arises from poor workmanship by the repair shop. Our standard reports focus on inherent diminished value and do not cover repair-related diminished value, which requires an in-person inspection and can be expensive. Pursuing these claims may also involve legal complexities between the repair shop, the consumer, and the insurance company.
Does Louisiana state law allow claims for diminished value?
Diminished value and supporting case law has been around for many years. The 2010 LA Revised Statute §9:2800.17 directly addresses liability for the diminution in the value of a damaged vehicle and provides that:
Whenever a motor vehicle is damaged through the negligence of a third-party without being destroyed, and if the owner can prove by a preponderance of the evidence that, if the vehicle were repaired to its preloss condition, its fair market value would be less than its value before it was damaged, the owner of the damaged vehicle shall be entitled to recover as additional damages an amount equal to the diminution in the value of the vehicle. Notwithstanding, the total damages recovered by the owner shall not exceed the fair market value of the vehicle prior to when it was damaged, and the amount paid for the diminution of value shall be considered in determining whether a vehicle is a total loss pursuant to R.S. 32:702
We can provide examples of numerous court decisions as evidence that diminished value claims are honored in local courts. You are welcome to utilize and submit our legal examples however keep in mind that we are not lawyers. We’re just vehicle appraisers, so all we can do is provide you with prior decisions.
What is the deadline for recovering diminished value in Louisiana?
The statute of limitations in Louisiana unfortunately is only one year from the date of accident so don’t hesitate for long after the repairs have been completed.
What is a diminished value claim?
Insurance companies are often quick to repair your car but may not inform you about the separate claim needed for diminished value. They might even have you sign a release that bars future diminished value claims. Unlike other claims, adjusters won’t voluntarily discuss diminished value and may lowball their estimates. To succeed, you’ll need solid evidence, likely a formal written demand, and negotiation skills. While the process can be complex, we offer guidance throughout.
Should I ask for diminished value? Is a Diminished Value claim really worth pursuing?
You certainly should pursue a diminished value claim because you can be sure that, unless you never resell your car, at some time you’re going to be affected by the reduction in value as a result of the accident. We witness and help clients recover thousands of dollars all the time based on our reports. Often times a customer will tell us that they’re amazed at how much they receive in comparison to the cost of our report. In fact after settling their claim, some tell us that our fee is too low. Since you only have a year to file a claim, it’s best not to hesitate.
Do insurance companies cover diminished value?
If the accident was not your fault, then the insurance company of the at-fault party owes it to you. Although a few states allow first party diminished value claims, Louisiana and the majority of states do not. A first party claim would be utilizing your collision or full coverage from your personal insurance company. Almost all insurance companies are aware that all states permit diminished value claims when someone else is at fault for the damages to your vehicle, however many adjusters will be reluctant to admit this and may argue otherwise in order to avoid paying a claim.
When do insurance companies pay for /compensate diminished value?
In Louisiana, first someone has to be at fault for you to file a diminished value claim. Different insurance companies have different policies and procedures. Some companies are lenient towards diminished value while others may refuse to pay all together even if they know they owe it. In the latter case, you may have to file a lawsuit. Judges in Louisiana do award diminished value if you can effectively prove your claim.
What if I was responsible for the car accident?
Unfortunately there is very little remedy in Louisiana if you were at fault for the accident. There are only a few states that will allow a first party (collision or comprehensive coverage) claim for diminished value. The only option that we’re aware of is to file your loss on your taxes. Drivers who wreck their own vehicles still may also have recourse by taking a tax-deduction for the diminished value of their automobiles. Casualty losses such as automobile diminished value may be filed on IRS Form 4684. Even the cost of the diminished value appraisal can be tax-deductible on Line 22 of IRS Schedule A. We don’t have expertise with this and suggest that you consult with your accountant.
Will I be able to collect diminished value from the insurance company?
Most people that are persistent in pursuing their claim ultimately end up collecting. Unfortunately some companies can be very difficult to deal with and are reluctant to pay your claim. This is when a quality reputable appraisal becomes important. Many experienced and good adjusters know to back down when they have a report that will be difficult to refute, however you’ll occasionally come across that impossible adjuster. This is when filing a lawsuit will become necessary. Local courts traditionally award diminished value if you have proper documentation supporting your claim.
How do insurance companies calculate diminished value?
Insurance companies tend to do whatever provides the lowest payout. Many will attempt to use the 17 C formula or some form of software. The 17c formula pertains to a Georgia class action suit against State Farm and should have no bearing on claims in Louisiana, yet it is used widely by insurance companies. The formula has many flaws. Most software is developed by programmers, and insurance companies cannot provide any explanation of how the numbers are derived. We have access to the same software used by the claims departments of several insurance companies and find that the software is often lower than is occurring in the actual market. Please contact us to get a better understanding of what your claim might truly be worth.
Do I have the right to get my own diminished value assessment report?
You have the right to hire your own appraiser to help determine your diminished value loss. The insurance company for the at-fault party must consider your independent assessment. Judges give strong consideration to evaluations from licensed unbiased impartial appraisers.
When to make a diminished value claim?
It is generally best to be patient and file your claim directly after the vehicle repairs have been done. There’s always a chance that the body shop and damage appraiser will have to do what’s called a supplement. This is where additional damage or repairs are discovered after work has commenced on the vehicle, and has the tendency to increase the cost of the repairs. It’s best to wait until all of the work is completed because after they break the vehicle down, the body shop may ultimately report to Carfax or Autocheck that the damage was more severe than previously thought. You may not recover all that you deserve if you attempt to file a claim too early. We’d be glad to assist with letting you know when is the best time to file a claim.
Why am I just now learning about this and why has this become important now?
In the past it was difficult to know if a vehicle had a prior accident history. It required an inspection by an expert and people didn’t find out about diminished value until they went to trade-in their car. Due to advances in information technology, it is extremely rare that you will be involved in an accident nowadays without it being recorded in a vehicle history. The two main companies providing these reports are CARFAX and AutoCheck. You probably will suffer a diminished value loss if your auto’s accident history has been reported to either company.
What information is included in a vehicle history report about my car?
Vehicle history reports can include details collected from police reports about the severity and area of damage to the vehicle and whether airbags deployed. Body shop information is gathered about the extent of repairs. Insurance company data is compiled along with information from dealerships, salvage yards, and other accident data sources. Unfortunately these reports are often inaccurate and may over or under state the nature of damages to your vehicle.
If I believe my accident will not be reported to CARFAX or Autocheck, should I still try to recover diminished value?
There is no guarantee that your car accident will not appear in a vehicle history report at some time in the future. Even if your accident is not reported, it still could affect the amount you are offered from a dealer for a trade in. Dealers have a trained eye and know how to spot if a vehicle has beein in an accident. For example, they can detect paint work using gauges that compare the thickness of the paint on repaired panels to your original panels. In addition, some states have damage disclosure laws that require you to report an accident history to a potential buyer.
Does the type of vehicle I have affect the diminished value?
Most definitely. Trucks are considered to be tougher than cars so minor damage accidents do not affect them as much. If you are driving an average vehicle, you may not suffer as much diminished value as you would with a high end, more expensive vehicle. The reason is that most buyers of luxury vehicles are very particular and demanding. Many luxury vehicle purchasers will not buy a vehicle with an accident history and if they do, they’re going to demand a significant discount.
Will my vehicle’s age and mileage affect my diminished value claim?
You should expect to recover a larger amount of diminished value for a newer car with lower mileage and less diminished value for an older car with higher mileage. As a general rule, the ideal prospects for getting diminished value are vehicles that are five years or newer, unless your vehicle was a luxury model or otherwise more valuable.
What accident factors affect my vehicle’s diminished value?
Each accident, vehicle and situation is different so when evaluating diminished value it’s important to specifically review all of the factors involved in each particular scenario. The slightest detail such as whether the impact was to the front, side, or rear can have a major impact on the diminished value. The severity on the accident history is a major factor and will have a large effect on the amount of your loss. The difference in a Carfax or Autocheck that says light damage as opposed to moderate or severe damage is significant.
Can my diminished value be estimated without an in person inspection?
Our standard appraisal addresses inherent diminished value only, which is the amount a vehicle is perceived to have decreased as a result of the accident. It involves determining how much local used car sales managers depreciate the vehicle based on its accident history. An in person inspection is not necessary to provide you with a reliable report to document your diminished value loss.
Do I really need to hire an expert to pursue a claim?
State law dictates that the claimant (you) have the duty to prove your claim. Without credible documentation you will have trouble substantiating your loss. There’s a small chance you may be able to succeed without a professional appraisal report however you probably won’t get anywhere near what your claim is worth. It’s generally worth it to pay the small cost of an appraisal.
How do I get started?
All we need to get started is a copy of the repair estimate and a $100 deposit. The deposit covers the cost of ordering vehicle histories from Carfax or Autocheck and gasoline/time to meet with local auto sales managers. All you have to do is send us a copy of the repair estimate. We will then review the Autocheck or Carfax vehicle history to determine if your claim is feasible before proceeding. We will only request a deposit if your claim is determined to be feasible.
Can I get the insurance company to pay for the appraisal report?
This should definitely be addressed when doing your final negotiation. You can request reimbursement for the cost of our report from the at-fault insurance company. Most insurance adjusters will reimburse you once they see the quality of the report, although some adjusters or companies will try to save any penny they can and can be belligerent. You will generally recover enough that you won’t mind not being reimbursed, but if you don’t address this in your negotiation, you can rest assured that they aren’t going to pay you after the fact. We’ve been informed that the cost of a diminished value appraisal can be tax-deductible on Line 22 of IRS Schedule A, but you’ll need to speak with an accountant for more details on that.
If I’ve already settled my property damage can I still file a diminished value claim?
This depends on whether you signed a property damage release after your vehicle was repaired. If you signed a written release, then you can pretty much rest assured that you signed away your right to recover diminished value.
Do I need a lawyer for a diminished value claim?
In most cases no. In order to properly pursue a claim, you should have an independent appraisal from an unbiased third-party. Our skillfully prepared reports are so thorough that you have the option of presenting your demand for lost value directly to the insurance company yourself. Insurance adjusters always try to save as much as they can, so they will definitely attempt to negotiate with you and it’s best to never accept their first offer.
One thing to always consider is that having an attorney may not necessarily result in a higher settlement. Most attorneys charge 33% or more of your settlement in order to represent you. If the insurance company refuses to pay or won’t make a reasonable offer, you may have the option of proceeding with a justice of the peace court in Louisiana. These courts have limited jurisdiction over certain types of civil cases up to $5,000. Insurance adjusters aren’t intimidated by lawyers, but they are concerned with bottom line claim costs and know they have a duty to avoid a judgment against their insured. If you proceed and are backed up with a detailed report of your diminished value loss, it often results in the insurance company raising their offer because they may not want the added expense of legal fees which may exceed the amount of your demand.
If your diminished value exceeds $5,000 and the adjuster refuses to budge then you’ll have to decide whether to hire an attorney or lower your demand. We can provide you with the guidance to effectively pursue your claim, but keep in mind that all cases are different and you may have to consult with or hire an attorney depending on the circumstances.
If I sign an insurance company release, will that prevent me from being compensated for diminished value?
Be careful before signing any release presented by an insurance company. It’s important that you don’t unintentionally sign something that prevents you from getting your proper diminished value settlement. If you sign a general property damage release after your repairs are completed, then you could be forfeiting your rights to further recovery. You might want to consider consulting with an attorney before signing any release.
Do I have to sell my car to file a diminished value claim?
Some adjusters will try to tell you this, but it’s not true. Your vehicle decreases in value no matter when you sell the vehicle and since you only have one year to seek reimbursement, you should pursue your claim immediately after your vehicle is repaired.
What support do you offer after I purchase my diminished value report?
We provide you with a sample demand letter that you can edit and submit to the insurance company to file your claim. We are always available if you need any assistance. You can contact us by phone or email at any time. We have years of experience dealing with adjusters and have heard all of the excuses. We’re always glad to provide general advice on recovering your diminished value. Unfortunately, we cannot negotiate for you. Only an attorney can do that.