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Property Damage: Diminished Value

It is common sense that you car will be worth less money if it has been in an accident.  Its value has been diminished.  The loss in value is a separate claim, called a Diminished Value Claim (DV).  You are entitled to this money in addition to getting your car fixed.

When you ask your insurance company for “diminished value” they will almost always come back with a low number.  People who don’t use ClaimClinic or know about diminished value beforehand will usually just accept the offer (insurance companies will normally mail you a check right away) thinking it’s found money.  What they don’t realize is that insurance companies make millions of dollars each year by low balling diminished value claims.

Figuring Out If You Get Diminished Value

Not every car repair will result in a claim for diminished value.  In general, you need to have the following factors:

  • Your car was worth at least $5,000 before it got damaged
  • Your car had at least $1,500 in repairs
  • Your car was less than 8 years old at the time of the accident and repair
  • Your car did not have a salvage title or was ever declared a total loss
  • You have not missed your state’s statute of limitations

But ask for DV even if you don’t meet all these requirements.  It never hurts to ask for more money.  All they can say is no.

Proving Lost Value

You need evidence to support your claim for a higher diminished value claim then what the insurance company is offering you.  What you need is an appraisal report from a good DV appraiser.  Unfortunately, this is the only evidence the insurance companies will accept as support for a higher DV demand.

2 Different Types of DV Reports

There are generally two different kinds of DV reports.  There is a true appraisal and then there is the desk appraisal/assessment.

Sample Diminished Value Reports

  • DV Report #1
  • DV Report #2

true appraisal requires the appraiser to physically inspect your car and examine the quality and extent of repairs.  These are more expensive for obvious reasons.

desktop appraisal/assessment is where the appraiser examines facts about your car (make, model, year, mileage, repair history) and the current repair estimate to come up with a DV amount.  Basically, the appraiser is assuming all the repairs were excellent in quality, which gives the insurance company a best case scenario and the benefit of the doubt on the DV amount.  That is how appraisers can give you a DV amount without inspecting the quality of repairs.  Instead, the appraiser assumes the repairs were top-notch and even so, the value of your car has decreased by X amount.  A physical inspection of your car would only reveal less then stellar repairs which would increase your DV amount.  This is why insurance companies will accept a DV desktop appraisal as evidence.

Dealing With Diminished Value Appraisers

You need to use caution when it comes to DV appraisers.  Most charge anywhere from $100 to $200 dollars and the caliber of report they provide varies wildly.  It is the wild wild west out there and you don’t know how the appraiser is coming up with their figure OR whether you are getting your money’s worth.  When searching out a DV appraiser, look for:

  • Licensing – is the appraiser licensed?
  • Membership in professional appraiser associations
  • Membership in the Better Business Bureau (and check if there are complaints against them)
  • Someone in your state

Which Insurance Company

In some state’s you can make a DV claim against either your insurance company or the other driver’s insurance company if the collision was his/her  fault.  These two difference claims are called 1st Party and 3rd Party claims.

If you make a claim against your insurance company it is called a 1st Party Claim.  This is a contract claim because you are owed DV under your insurance policy, which is a contract.  Interestingly, you can make a 1st Party Claim even if you were at fault because your insurance covers any damage to your car regardless of fault.  1st Party Claims are not available in every state. You need to review your insurance policy to see if it this is doable.

If you make a claim against the at fault driver’s insurance company it is called a 3rd Party Claim.  This is a tort claim, not a contract claim.  You are getting DV from the other insurer because its driver was negligent, just like you are in your personal injury claim.

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