Collecting Your DV Claim

In third-party claims, where you are the claimant, it is nearly impossible for an insurance company to deny payment for Diminished Value, although they frequently try. You are entitled to have your automobile restored to pre-loss condition and preloss 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 depreciation.

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 lead 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 you filed a claim under your own coverage, but you were not at fault for the accident, you may still be able to collect for the diminished value.

First party claims (where you were at fault) are controlled by the contract of insurance. Recently, several insurers have added exclusions for diminished value in the insurance contract (policy), stating that the policy does not cover diminished value. If you have one of these new policies, you will probably NOT be able to collect for the lost value if the accident was your fault and you filed the claim under your insurance coverage.

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).

The other good point is that even while the insurer may be successful in denying a diminished value payment in a first part claim, they are still obligated to restore your vehicle to pre-loss condition – not some mystical/mythical “industry standard”. There is no such standard.  Besides, why should someone else be allowed to determine what is acceptable to you? The true measure of fulfillment is PRE-LOSS CONDITION. Nothing less.


The insurance company does NOT have the final say. If the other person’s insurance company refuses to negotiate fairly, you always have the option of seeking restitution in a legal venue as long as you file the claim with the court within the statute of limitations.

Many people think that the lawsuit is filed against the insurance company – but that is not the case – the claim is filed against the negligent party – the insurance company was not at fault – they weren’t even there.

Please note that there are potential downsides to litigation – contact Collision Consulting for more information.

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

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 miles – 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 Automobile Policy (PAP) 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

None of the foregoing 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.

If you are interested in filing a DV claim, or if you just have questions please email or call us at your earliest convenience.

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