Claims

Claim Eligibility

None of the following information is intended to be, nor should it be construed as legal advice or an interpretation of any law. We are not attorneys and cannot perform as such. For legal advice, you are urged to consult a practicing attorney, or contact us for a possible referral..

Types of claims:

There are two types of automobile insurance claims: First-party and Third-party.

First-party claims:

First-party claims are where the owner uses their own insurance coverage for the repair. This type of claim is controlled by the contract of insurance. Most insurers have added exclusions for diminished value in the insurance contract (policy), stating that the policy does not cover diminished value. 

However, if the vehicle owner was not at fault, it is possible to have the repairs addressed by the vehicle owner’s insurance company (in some cases this may be preferable) and still file with the other person’s insurance company for the diminished value. While the owner’s policy might exclude a DV claim, having the repairs done through their own coverage doesn’t absolve the at fault driver (and subsequently their insurer) from being responsible for the loss of value.

Actually, in some cases it might be a good idea to go through your own coverage to have the repairs done for a couple of reasons. 1) Your insurer is obligated (via the insurance contract) to treat you fairly whereas the other person’s insurance company has to look out for their insured’s best interest. 2) Going through your own insurance coverage preserves the policy funds from the other person’s insurance policy. 

If the other driver was responsible for the accident and the damage to your vehicle was $15,000 and the rental cost was $2,000 and they only have $20,000 worth of liability coverage you would most likely be limited to a $3,000 recovery for the diminished value. Rest assured, after $15,000 in collision damage, the DV would be much more than $3,000. Using your own collision coverage preserves the adverse driver’s policy funds, but there are some very critical steps (such as prohibiting subrogation) that must be taken.

If the vehicle owner was at fault or if the accident was an act of nature (a deer ran into the side of the car or a rock slide caused the damage) it would be a first-party claims and most likely would not be eligible for a diminished value claim – however, there are some exceptions – please feel free to contact us to discuss your particular situation.

The good news is that this only applies to “First-party” claims – a claim where you are going through your own insurance company; it does not govern “Third-party” claims (where coverage is through the other party’s insurance company).

Third-party claims:

In third-party claims, where you are the claimant, the other person’s insurance has accepted liability for their insured’s negligence. In a Third-party claim it is nearly impossible for an insurance company to deny payment for Diminished Value, although they frequently try to do so. You are entitled to have your automobile restored to pre-loss condition and pre-loss VALUE. Since everyone knows that a vehicle that has been damaged is worth less than one that has not, the at-fault party (and subsequently their insurer through the contract of insurance that guarantees them protection) owes for the diminshment.

Third-party claims are not regulated by the insurance contract (policy), instead, they are governed by a body of law known as “torts”.

The basic concept of a tort is that the negligence of one or more individuals has led to loss or damages of another. It is a general rule that the law of torts attempts primarily to restore the injured party to as good a position as he held prior to the tort.

If, after the repair, the vehicle is not worth what it was before the loss, the victim can file a claim for the diminishment. A monetary diminished value settlement is the ONLY way to make the injured party whole because the repair process cannot undo the fact that the vehicle has been in an accident and it’s the accident HISTORY that causes inherent diminished value.

In a third-party claim, where the other person was at fault, the diminished value is almost always a recognized (and collectable) element of the loss. Some insurance companies tell claimants (the victim of the accident) that diminished value isn’t recognized in that particular state – what they don’t say is that they’re talking about FIRST-PARTY claims (where you were at fault).

Don’t believe the insurance company when they say:

“We don’t pay for diminished value.”
(Every insurance company pays diminished value claims.)

“Diminished value isn’t recognized in this state.”
(Diminished value is recognized in third-party settings in every state with the possible exception of Michigan.)

“The repairs restored the vehicle to pre-loss condition, so there is no diminished value.”
(It is the accident history that causes diminished value, no matter how perfect the repair.)

“There is no diminished value because the frame wasn’t damaged.”
(It doesn’t matter if the frame/unibody was damaged -$5,000 worth of damage is $5,000 worth of damage – the fact of the matter is that the automobile has been damaged and repaired.)

“You’re not eligible for a diminished value claim because you have over 100,000 miles.” (Modern automobiles often run for over 200,000 – mileage alone would not disqualify any vehicle from sustaining a loss of value.)

Misinformation on the Internet:

While the internet can be a terrific resource for doing research, there is a lot of misleading and/or incorrect information as well. We found these statements on various websites – possibly posted by insurance companies in an effort to deter the public from pursuing a claim for diminishment. Here are some examples:

“For most states, there’s generally no law that says insurance companies have to pay for diminished value claims.”
(Third-party diminished value claims are governed by Tort Law which is part of the Code of FEDERAL Regulations (CFRs), so technically it is not a state-by-state law, it covers the entire country because it’s FEDERAL law.)

“Some insurance companies have their own rules about diminished value claims.”
(What isn’t said here is that these “rules” are written in the Personal Auto Policy (PSP) and only apply to the policyholder. A person cannot be held to the terms and conditions of a contract they are not a party to. In a third-party claim anything in the other person’s policy – terms, conditions, restrictions, limitations, etc. would not apply.)

“If someone else was at fault, you can file a diminished value claim with your insurance and they will work it out with the other driver’s insurance company to get you the payout.”
(In nearly 20 years dealing with diminished value claims we have NEVER seen a First-party insurer assist with a third-party diminished value claim.)

“Use the 17c rule. This rule is commonly used by insurers to estimate the dollar amount of a diminished value claim.” {emphasis added}
(This is quite possibly the worst advice we’ve seen. Insurance companies look out for their own interests – not their insureds’ and certainly not claimants. The 17c formula under-assesses the amount of diminishment. For more on this formula, click here: 17c)