Diminished Value And Your Rights
October 5, 2007 – 5:37 am
There you were driving down the road, paying attention as you should, when out of the blue another driver runs a stop sign and nails you. Fortunately, no one is hurt but there is substantial damage to your vehicle. Not to worry, the other driver is insured and his insurance company will pay to repair the damage to your car. You get a few estimates from local body shops and it looks like it will cost about $2,500 to repair the damage. His insurance company cuts you a check, you get your vehicle repaired and life is good . . . or so you think! There is one issue that you failed to consider when you were dealing with the insurance company. Almost every vehicle that has been in a wreck will have some form of inherent diminished value (I know – that sounds bad and really can be).
Diminished value is a term that describes the loss to a damaged vehicle’s market value after repairs have been completed. Any vehicle that has been wrecked and repaired is affected regardless of the quality of restoration. Experts estimate that 55% of consumers would not buy a car that had been in an accident. As many as 81% of potential car buyers say they would not have a car that had been in a wreck unless it was discounted substantially.
The days of sliding a wrecked car by on a dealership are gone. Almost all dealerships will run a Car Fax report that will show the owner, mileage and body repair history. You can bank that the dealership is going to deduct diminished value from their offer and it may be as high as 50% of it’s retail market value depending on the year, make and model. So, before you accept a settlement offer from an insurance company, make sure you have an expert evaluate the vehicle to determine the diminished value.
On his website, consumer advocate Clark Howard writes:
“The insurance companies hate the idea of bringing you “whole” when a car is fixed, but there is a tremendous amount of money at stake. The Dallas Morning News has reported that insurance companies are low-balling people throughout Texas. One man was offered $250 on an $11,000 repair. He took the company to court and received $3,500. State Farm has said that it does not believe in diminished value. There have been so many problems that diminished value consultants are now available to help you handle a stingy insurance company. Many insurance companies say that diminished value will raise rates, but this is actually false. If there is a raise, then it will be minimal. Don’t let your insurance company cheat you out of the money you deserve!”
So make sure you stand up for your rights if you are unfortunate enough to suffer a loss as a result of an automobile crash.