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Article By David Morris (Sun Herald News 1/7/08) Reprinted with Permission
This column took two years to write.
Actually it's the time it took to be fully compensated by the insurance company of an individual that made an improper turn and broadsided my wife's brand-new car while she was sitting at a stoplight back in January 2006.
That's because we had no idea that they owed us any more money.
Although the insurance company promptly paid all submitted repair bills as well as the cost of a rental car, we weren't reimbursed for the car's diminished value.
Diminished value? We didn't even know what it was.
"Inherent diminished value assumes optimal repair quality and is defined as the amount by which the resale value of a vehicle has been reduced simply because it has a significant damage history," says Richard Hixenbaugh. Hixenbaugh is the founder and senior appraiser of Collision Claim Associates in Georgia that provides independent vehicle appraisal services.
That makes sense. Take two cars side-by-side -- same year, color, model and mileage. One was in a major accident and repaired perfectly, the other is accident-free. Would you pay the same price for both? Assuming no, the difference in price or trade-in on the damaged vehicle is the diminished value.
And it's often difficult to hide the repair work. With a nationwide database of more than 5 billion records amassed from over 20,000 sources, CARFAX -- a wholly owned subsidiary of the R.L. Polk Company in Southfield, Mich. -- provides detailed backgrounds on almost any vehicle's past, which can include major mechanical repairs.
"While the principle of diminished value has long since been recognized by law, the insurance industry has gone out of its way to not pay consumers for this legitimate damage," Hixenbaugh says.
Now that I understood the concept and verified that Florida gives you four years to file a lawsuit, I contacted the insurance company last September -- 21 months after the accident -- and surprisingly got a cordially written response acknowledging the claim with a request for more information.
They sure knew what diminished value was. A month later I had a written settlement offer. Who needed to pay for an appraisal?
But the insurance company had never looked at our car and didn't provide any documentation for the settlement amount. Figuring that this probably wasn't their best and final offer, the idea of paying for a detailed court-ready appraisal report started to make sense.
By November, we had our report from Collision Claim Associates and submitted it to the insurance company. It took many repeated phone calls, including one to the company's claims grievance department to finally get the offer increased in December. It wasn't for the full, appraised amount, but it was 25 percent better and included being reimbursed for the cost of the appraisal report.
Will you be successful with a diminished value claim? It depends. Obviously, the at-fault driver has to be insured and preferably cited for a traffic violation. The newer your vehicle in better pre-loss condition, with no previous collision history, the better the chances.
Collision Claims Associates can be contacted at 866-438-6938 or online at www.collisionclaims.com.
CARFAX's Christopher Basso cautions that theirs is only one of the investigative tools available and "is not intended to be an end-all be-all. But coupled with a mechanic's inspection, it's a one-two punch," he said. Using both, major repair work will most likely be disclosed, and your used car is suddenly worth a lot less.
Diminished value. Two words that now make us informed consumers. And informed consumers are empowered consumers.