Best kept secret in the car insurance industry - Diminished value insurance

[urban.one]

Sounds like Georgia has made this law in the States and that there is a push in other states and Canada to implement this as law rather than individuals having to sue their insurance companies on their own.

http://www.cbc.ca/marketplace/blog/2011/02/what-to-do-if-youve-been-in-a-car-accident.html


This week, Marketplace investigates what some call the best kept secret in the car insurance industry: why insurance companies prevent people from claiming diminished value insurance on vehicles that have been in a significant collision. So if you've been in a car accident, here's what you can do:

1. Ask your body shop to appraise the amount of re-sale value your vehicle has lost

2. Ask your insurance company to compensate you for the diminished value your vehicle has incurred.

3. File a claim in small claims court if your insurance company refuses to compensate you for diminished value.

4. Press your insurance company to write off the damage rather than repair it if the diminished value is high or you were planning to trade your car in soon.

5. Call or write to the Insurance Bureau of Canada and the insurance regulator in your province if you think that diminished value should be covered.


For more, check out Marketplace's report, "Crash and Burned" this Friday at 8 p.m. on CBC-TV. Click here to watch a preview with co-host Tom Harrington.

[jazzyb]

I wonder if you could do this for an accident that happened 3 years ago?

[colsankey]

I was at my state farm agents office on Wednesday and she actually recommended I get a similair style of coverage, which had a moderate rider) $50/term for 2 years and would be reduced after 2 years until 5 years.

[JRSC00LUDE]

One of my buddies on here has taken this approach with his insurance and gotten results.

It is a valid concern imo, I don't want to pay full market value for a used vehicle that had $14,000 of front end damage (for example) from a hit/run collision say....three weeks after it was bought off the lot. And, it's not fair for the owner to suffer that penalty either. ;)

(yes, that's what happened to the last new car I bought....fuck that pissed me off)

[corsvette]

My cousin bought a brand new Dodge Ram 3/4 ton diesel megacab that got t-boned when it was 3 months old. The damage bill was just a shade under $30,000 to get fixed. I told him this would show up on a Carfax/Carproof when he goes to sell it (he still argues it wont) It's going to have a major inpact on resale even if he trys to dump it on a dealer...they run carproofs on all their used purchaces and trade ins now. The insurance companys should be held accountable for sure.

[syeve]

Originally posted by corsvette
...shade under $30,000 to get fixed...


Ugh - That is terrible. My S4 was in a hit-and-run, I am defn going to check this out.

[Xtrema]

Yeah my last accident (not at fault), neither insurance will pay out the diminished value since they spent $6K to fix the front end and $2K+ on rentals.

Car is already sold, so I'm not going to worry about it but will definitely keep this in mind.

[BokCh0y]

Was side swiped about 3 weeks ago, 15k damage to my SUV.

Looks like I'll be playing this card ASAP.

So what's the procedure on this?

[DENZILDON]

Originally posted by BokCh0y
Was side swiped about 3 weeks ago, 15k damage to my SUV.

Looks like I'll be playing this card ASAP.

So what's the procedure on this?

This week, Marketplace investigates what some call the best kept secret in the car insurance industry: why insurance companies prevent people from claiming diminished value insurance on vehicles that have been in a significant collision. So if you've been in a car accident, here's what you can do:

1. Ask your body shop to appraise the amount of re-sale value your vehicle has lost

2. Ask your insurance company to compensate you for the diminished value your vehicle has incurred.

3. File a claim in small claims court if your insurance company refuses to compensate you for diminished value.

4. Press your insurance company to write off the damage rather than repair it if the diminished value is high or you were planning to trade your car in soon.

5. Call or write to the Insurance Bureau of Canada and the insurance regulator in your province if you think that diminished value should be covered.


For more, check out Marketplace's report, "Crash and Burned" this Friday at 8 p.m. on CBC-TV. Click here to watch a preview with co-host Tom Harrington.

[Seth1968]

Saw that preview last week. Can't wait to see the episode.

My 2003 Civic Coupe was only two weeks old when a senior backed into it:

I was at a Safeway and had parked about a dozen empty spaces away from everyone else. I was in there for about 15 minutes and came out to see a pickup truck had crushed the front end. Over $4000 damage to my brand new car. The fucking guy had parked 2 stalls in front of me, yet somehow reversed through the driving lane and another parking stall to smash into my car.

His insurance company paid for everything of course, but what about the loss of value to my car?

My only solace is that he didn't kill anyone and will never drive again.

[hampstor]

By taking your own insurance company to small claims, I wonder what the insurance company would (or could) do to your rates. Could they even raise your rates or cancel coverage?


Originally posted by BokCh0y
Was side swiped about 3 weeks ago, 15k damage to my SUV.

Looks like I'll be playing this card ASAP.

So what's the procedure on this?

Procedure is in the original post and the link in the original post.

[BokCh0y]

okok reading>me

[spikerS]

Originally posted by hampstor
By taking your own insurance company to small claims, I wonder what the insurance company would (or could) do to your rates. Could they even raise your rates or cancel coverage?



Yeah, by taking your company to court, kinda ruins any relationship you have with them.

[tom_9109]

The 'diminished value' case will never win against your own insurance company. You may also hear it referred to as "accelerated depreciation".

The contact between you and them states:

"The Insurer agrees to indemnify the Insured against direct and accidental loss of or damage to the automobile, including its equipment."

A reduced resale value as a result of the damages is not DIRECT loss or damage.

____________________________________________

If you are suing someone else (and in turn their insurance company) it is *possible* however the burden of proof would be yours. You'd have to prove the collision caused your reduced value.

Their lawyer would argue that if the vehicle is repaired to industry standards and returned to its press loss condition that in fact there is no diminished value. Or they could even argue that the perceived reduce value is caused differently.

I'll definitely watch this but don't get your hopes to high people.

____________________________________________

And on another note, this has been tried many times and beat by many insurance companies.

[Seth1968]

Originally posted by tom_9109
If you are suing someone else (and in turn their insurance company) it is *possible* however the burden of proof would be yours. You'd have to prove the collision caused your reduced value.

Their lawyer would argue that if the vehicle is repaired to industry standards and returned to its press loss condition that in fact there is no diminished value.

^This.

You'll lose the legal case despite everyone knowing that you've lost significant resale value.

[tom_9109]

I have this recording tonight and I'll most likely tear it apart piece by piece in a post after.

I do not believe a car is worth less because of an accident. POOR REPAIRS lower a value. If the car is fixed correctly it shouldn't be an issue. If it's not fixed correctly, sue the shop. :)

[Seth1968]

Originally posted by tom_9109
I have this recording tonight and I'll most likely tear it apart piece by piece in a post after.

I do not believe a car is worth less because of an accident. POOR REPAIRS lower a value. If the car is fixed correctly it shouldn't be an issue. If it's not fixed correctly, sue the shop. :)

True, but perception is reality. That is, when a potential buyer finds out the vehicle was in a major collision, they'll most likely offer much less or walk away.

[89s1]

Even the best body shop has to use some filler.

[Mibz]

Someone will have to link because I'm foggy on the details, but if you guys remember the SL65 that got crashed by a valet recently, the guy got something like $3,000 for diminished value. A ridiculously low amount, for sure, but it's something.

[Xtrema]

Originally posted by tom_9109

I do not believe a car is worth less because of an accident. POOR REPAIRS lower a value. If the car is fixed correctly it shouldn't be an issue. If it's not fixed correctly, sue the shop. :)

Tell me which bodyshop in town can match oem paint with the same finish, gloss and age.

My insurance's approved shop did a pretty good job but it would only take about 5s comparing to know the panel isn't original.

[tom_9109]

Originally posted by Xtrema


Tell me which bodyshop in town can match oem paint with the same finish, gloss and age.

My insurance's approved shop did a pretty good job but it would only take about 5s comparing to know the panel isn't original.

the word "original" doesn't appear in the auto policy. In addition the courts don't expect someone to put you into your original position, they expect you to "indemnify" you for your loss, financially.

BIIIIIIIG DIFFERENCE.

On a side note, I have skimmed the case law on that Mercedes driven by the valet and the reason the insured was paid was based on the insured stating the adjuster entered into a verbal contracting saying he'd pay it and upon examination the adjuster said he didn't however the judge didn't like his demeanor and questioned his integrity. The precedent set in that case will be irrelevant to any diminished value case.

[Mibz]

Originally posted by tom_9109
On a side note, I have skimmed the case law on that Mercedes driven by the valet and the reason the insured was paid was based on the insured stating the adjuster entered into a verbal contracting saying he'd pay it and upon examination the adjuster said he didn't however the judge didn't like his demeanor and questioned his integrity. The precedent set in that case will be irrelevant to any diminished value case. That's fantastic, thanks for taking the time to do that.

[Masked Bandit]

Here's the other side of this equation that nobody has mentioned yet. Let's assume that this becomes part of the normal claims settlement, do you think the insurance companies are just going to eat the extra claims costs? No.

If the overall claims cost increases due to paying this stuff out everyone's rates will just go up. It's that simple. Then there will be screaming in the streets "Those greedy bastards are just ripping us off!". Here's the formula people:

Money paid out in claims + operating expenses = premiums collected. For regular P & C insurance companies there is rarely a profit made on underwriting. They make their money by taking the premium dollars and investing it throughout the year. If the payout on claims goes up, so do the premiums, for everyone. It's just that simple.

[tom_9109]

Originally posted by Mibz
That's fantastic, thanks for taking the time to do that.

Actually I was mixed up on this one.

Signorello v. Khan (http://www.canlii.org/en/bc/bcsc/doc/2010/2010bcsc1448/2010bcsc1448.pdf) is what you are referring to.

I have read the case in its entirety.

YES the court did award an amount for accelerated depreciation. However keep in mind that the appraiser for the defense didn't really prove his points well.

Accelerated depreciation may in fact exist but if you want to get money for it you have to immediately sell the vehicle and prove the amount lost was caused by 'accelerated depreciation'.

This case with the Valet/Mercedes definitely ended in favor of the insured however shouldn't have much impact on anything as its a $200,000+ Mercedes under very specific circumstances.

___________________________________________

I know a lot of people are going to see this as a good way to get cash however its not a reasonable thing to do in most cases.

Remember, under your own insurance policy in Alberta there is no chance for recovery under the contract. Any lawsuit would have to be directly to the third party that caused it.

In order to have a chance you'd have to :

1. After repair, immediately sell the car.

2. Document and prove that you got less than you should have and that your sales method was proper gaining you maximum return. *You cannot simply sell low as a martyr to the case*

3. Prove the repairs were all completed correctly and 100% to industry standard. (If you don't prove this, they can defend on the basis that the shop you chose did substandard work and that was the cause of depreciation)

3. Hire a lawyer and sue the third party.

4. Hire an appraiser to capable of proving your position. (Tough to do, I assure you)

4. Be successful in the case.

____________________________________________

If we use this Mercedes as a case he recovered $16,000 for the accelerated depreciation on a vehicle that the court held was valued at $173,333.00 at the time of loss. This equals 9% recovered for accelerated depreciation.

Lets remember that this isn't your typical vehicle and for arguments sake lets say everyone could get a cheque for accelerated depreciation. It would be fair to assume that most cars wouldn't be impacted as heavily as that type of vehicle was in this case.

The judge stated :

"I accept the evidence of the plaintiff's expert, Mr. Cogbill, that persons who can afford prestige vehicles in this class are highly discriminating when it comes to making a purchase. That stands to reason. "

I believe that its reasonable to assume that a judge might not think an average buyer in the open market might not be "highly discriminating". Lets face it, how discriminating is a soccer mom buying a mini van? How discriminating is a college student buying a used honda civic to get to and from work/college? Chances are there are some buyers who will be "highly discriminating" but the majority of buyers would be much more reasonable and accept a vehicle that was damaged and repaired correctly.

But lets use the 9% (ABSOLUTE BEST CASE SCENARIO), in our theoretical world a person with a $15,000 car would get awarded $1,350.00 by the courts.

Now out of that $1,350.00 you have to pay the lawyer and the appraiser. The lawyer would be arround $200 an hour and have dozens of hours in. The appraiser would be over a $100 an hour and taken at least 10 hours to be of any value in court.

12h x $200 = $2,400.00
10h x $100 = $1,000.00
________
=$3,400.00 (minimum) costs to recover $1,350.00


Doesn't really seem like it would be a profitable pursuit, does it?

[Mibz]

Could you not push for the insurance company to cover court costs? I don't know these things.

While I agree that they may not be as careful about their purchase, the fact that dozens of other vehicles exist in their area means it's far easier to be discriminating.

Nobody is going to buy an SL65 that's been crashed when clean examples exist in North America, but nobody's going to buy a Mazda that's been crashed when 40 clean ones are for sale in their city.

[tom_9109]

Originally posted by Mibz
Could you not push for the insurance company to cover court costs? I don't know these things.

While I agree that they may not be as careful about their purchase, the fact that dozens of other vehicles exist in their area means it's far easier to be discriminating.

Nobody is going to buy an SL65 that's been crashed when clean examples exist in North America, but nobody's going to buy a Mazda that's been crashed when 40 clean ones are for sale in their city.


Yes costs *can* be awarded.

People buy cars that have been damaged all the time. Most people don't care if a car has had a few grand in damage. The care if it is a total loss thats been rebuilt, but thats not the case here.

The average damage sustained in Alberta is about $3,500.00, most people aren't too worried about that.

[cloud7]

Instead of starting a new thread, I am just gonna wake this year old thread up from the dead.

Has anyone here been attempting or successful at claiming for Diminished Value on their crashed vehicle? and if so, who did you use (diminished value specialized lawyers, appraisers, etc.).

[J-hop]

edit: My fail, quoting a year old post :rofl: