Most people know how collision and liability property damage claims work following a car accident. However, from my experience as a Car Accident Lawyer, most people are confused when it comes to diminished value claims. Over the years, I’ve been asked so many questions about diminished value, I thought it would be helpful to put together this brief guide.
1. What is diminished value?
Simply put, it is the value a vehicle loses as a result of being in a collision. No matter how good the repairs, a wrecked car is never going to be worth as much as a similar car that has never been in an accident. Think about it this way, you are looking for a used car, and the dealership shows you two gorgeous identical cars listed at the same price. The only difference, the Carfax reports show one of the two cars was once involved in a car accident at some point. Which car would you buy?
A recent consumer survey indicated 55% of potential buyers would never buy a vehicle with a prior accident history. Additionally, those surveyed that indicated they would buy a wrecked vehicle said they would have to be given a large discount to make the purchase. In many instances, not only should the insurance company pay to repair your vehicle but they should also pay you for your vehicle’s diminished value. Valid claims should always be pursued. In many cases, I’ve seen diminished value claims worth several thousand dollars.
2. Has my vehicle suffered diminished value?
The short answer is that depends. If before the accident your vehicle was relatively new, in good condition, with no significant prior accident history, with significant current property damage then you certainly have a diminished value claim. The value of the claim will vary based on numerous factors. For example, $5,000 in repairs for collision damage will have a larger impact on the value of your car than $5,000 in repairs to paint over cosmetic damage. Along those same lines, if your vehicle already had a significant accident history, suffered minimal accident damage, then your claim will probably have little or no value. Most lawyers offer free consultations. If the insurance company is making you a diminished value offer that seems too low, it might be a good idea to contact a lawyer for a free consultation.
3. How do you determine diminished value?
There are formulas that in some instances can come close to determining a vehicle’s diminished value. However, the only way to accurately determine a vehicle’s diminished value is to hire a qualified expert.
Many insurance companies are still using the discredited and inaccurate “17-C” formula proposed as a resolution in the Mabry v. State Farm (274 Ga. 498) Georgia Supreme Court Decision. Based on this or similar formulas insurance companies often offer low offers for diminished value claims. They are counting on you not knowing any better. You do not have to accept the insurance company’s diminished value calculation. You have the right to hire an expert to do an independent diminished value evaluation.
4. Can I recover diminished value from my own insurance company?
In most states the answer is no. However, in Georgia the answer is yes.
Additionally, if you are pursuing a diminished value claim against your own insurance company and do not feel you are being given a fair offer, you may have the right to invoke the appraisal provision of your policy. Read your policy. You will usually come out better with the appraisers’ diminished value calculation than the insurance company formula.
5. What are the penalties if the insurance company refuses to pay my diminished value?
Under Georgia law you or your attorney can make a 60 day demand on the insurance company to pay the full value of your diminished value claim pursuant to OCGA § 33-4-6. If the insurance companies refusal to pay the claim is in bad faith you will be entitled to recover an additional $5,000 penalty or 50% of your claim, whichever is greater, as well as your attorney’s fees (if you hired an attorney).
6. Can I recover diminished value without hiring a lawyer?
Yes. Insurance companies are usually straightforward when it comes to paying property damage claim and lawyers are usually not necessary. However, most insurance companies are resistant to paying full value on diminished value claims for some reason. Do not trust the insurance company to offer you a fair value for your DV claim. If you do not contact a lawyer, do your homework. Check to make sure the offer the insurance company is making is fair. Research whether the facts of your case warrant hiring a diminished value expert. If they do, hire an expert to do an evaluation and insist the insurance company pay you the full value of your claim.
7. How can I protect my rights and receive the full value of my diminished value claim?
Contact a lawyer experienced in diminished value claims or do your own research. Either way make sure the insurance company does not get away with paying you less than your vehicle’s full loss in value.