At this time, I want to make it very clear, that I AM NOT an attorney, nor providing
you with legal advice. The information that you are about to read is from my research on first-party diminished value and the Personal Auto Policy. Always consult with an attorney about your legal rights.
(2.) No, I am not; for the simple reason, an insured may be in need of cash, so they intentionally wreck their vehicle, in order to collect a Diminished Value check from their auto insurer.
In the Personal Auto Policy it does clearly state that the insured cannot collect Diminished Value.
“We will pay for direct and accidental loss to your covered auto or any non-owned auto, including their equipment. Direct and accidental loss does not include any reduction in the value of any vehicle after it has been repaired, as compared to its value before it was damaged.”
What Your Auto Insurer Does Not Want You To Know
Few, if any of you, have ever read your Personal Auto Policy and if you did, do you understand it? I doubt it. When I was writing my book, Collision Collusion, I read my Personal Auto Policy and began to search the meanings of the language in it. What I learned from my research, would make auto insurers here in North Carolina very nervous. Nervous enough to know, if their insureds truly understood the Personal Auto Policy language. Auto insurers here in North Carolina would be facing class-action law suits, as they did in other states. I am now going to share with you what I learned, then, it will be up to you whether to take action or sit and do nothing.
Understanding the Personal Auto Policy
Part D – COVERAGE FOR DAMAGE TO YOU AUTO
INSURING AGREEMENT
“We will pay for direct and accidental loss to your covered auto or any non-owned auto, including their equipment. Direct and accidental loss does not include any reduction in the value of any vehicle after it has been repaired, as compared to its value before it was damaged.”
At the very beginning, Part -D first states: INSURING AGREEMENT. What does insuring agreement mean? I went on line to Business Dictionary, looked up the definition of insuring agreement and here is what I found. The Insuring Agreement in Part-D, is a section of the policy contract. The Personal Auto Policy is a CONTRACT, did you know that? Business Dictionary defines a contract as "a legal and binding agreement between two competent parties." The two competent parties are your auto insurer and the insured, which is you, the vehicle owner. Ask you attorney if you doubt me.
Insuring Agreement
The section of the policy contract that specifies the hazards the insured is covered against, the people covered, and the length of the contract.
http://www.businessdictionary.com/definition/insuring-agreement.html
Contract
A voluntary, deliberate, and legally binding agreement between two or more competent parties. Contracts are usually written but may be spoken or implied, and generally have to do with employment, sale or lease, or tenancy.
A contractual relationship is evidenced by (1) an offer, (2) acceptance of the offer, and a (3) valid (legal and valuable) consideration. Each party to a contract acquires rights and duties relative to the rights and duties of the other parties. However, while all parties may expect a fair benefit from the contract (otherwise courts may set it aside as inequitable) it does not follow that each party will benefit to an equal extent. Existence of contractual-relationship does not necessarily mean the contract is enforceable, or that it is not void (see void contract) or voidable (see voidable Contract). Contracts are normally enforceable whether or not in a written form, although a written contract protects all parties to it. Some contracts, (such as for sale of real property, installment plans, or insurance policies) must be in writing to be legally binding and enforceable. Other contracts (see implied in fact contract and implied in law contract) are assumed in, and enforced by, law whether or not the involved parties desired to enter into a contract.
Our limit of liability will be the lesser of the:
1. Actual cash value of the stolen or damaged property;
2. Amount necessary to repair or replace the property with other property of like, kind and quality.
This amount does not include any reduction in the value of the property after it has been repaired, as compared to its value before it was damaged.
What’s the meaning of repair or replace and like, kind and quality? In 2007, I began to research repair or replace and like, kind and quality on the Internet and found that they’ve been discussed in MANY first-party Diminished Value class-action lawsuits. The issue was only Diminished Value and not inadequate repairs.
The following court definitions or opinions on “to repair or replace the property with other property of like, kind and quality” is from Sims vs. Allstate Insurance Company, April 29, 2004, in which the Illinois Appellate Court, Fifth District.
Other first-party diminished-value suits I found on the Internet are: Siegle v. Progressive Consumer’s Insurance Company, 819 So.2d 732, Florida 2002, Allgood v. Meridian Security Insurance Company 807 N.E.2 d 131, Indiana 2005, Carlton v. Trinity Universal Insurance Company, 32 S.W.3d 454 Texas 2000 and Schaefer v. American Manufacturers Mutual Insurance Company, 47 Tex. Sup. Ct. J. 40, October 2004.
Repair/Replace
(Sims v. Allstate)
“By their definitions and the common understanding of the terms, ‘repair’ and ‘replace’ mean to restore something to its former condition, not to its former value.” See Allgood, 836 N.E.2d at 247-48.
Like, Kind and Quality
(Sims v. Allstate)
“Like, kind and quality' refers to 'replace,' not 'repair,' which encompasses the notion of restoring property to its former condition. Only to the extent parts are replaced does a 'repair' entail 'property of like, kind or quality.' To say one would repair an item with goods of like, kind or quality is simply not correct English. An item of property (or a part of that item) is 'replaced' with other property, but it is 'repaired' with tools and labor. 'Like, kind and quality' unambiguously refers only to replacement, not to repairs, and the verb 'restore' appears nowhere in the policy.” Allgood, 836 N.E.2d at 247-48.
Based on the Sims vs. Allstate, I would say, seldom do auto insurers honor the Limit of Liability, since they chose to repair damage parts over replacing damage parts. That is why I say there is first-party Diminished Value in North Carolina. There is also two other words auto insurers dislike hearing, these two words are Bad Faith. Those two words will get the attention of most attorneys.
What is Bad Faith?
By Gregory Boop, About.com Guide
http://businessinsure.about.com/od/insurancepoliciesandlaw/a/badfaith.htm
Insurance is a contract. In return for premiums, the insurer agrees to indemnify and defend you if a covered event occurs.
What if the insurer does not fulfill its obligations?
When an insurer fails to act in such a way as required in the policy (the "contract") the insured may have a claim for "bad faith." "Bad faith" is defined as:
1) n. intentional dishonest act by not fulfilling legal or contractual obligations, misleading another, entering into an agreement without the intention or means to fulfill it, or violating basic standards of honesty in dealing with others. Most states recognize what is called "implied covenant of good faith and fair dealing" which is breached by acts of bad faith, for which a lawsuit may be brought (filed) for the breach (just as one might sue for breach of contract). The question of bad faith may be raised as a defense to a suit on a contract. 2) adj. when there is bad faith then a transaction is called a "bad faith" contract or "bad faith" offer.
Not all disputes with your insurer fall into the category of "bad faith" and the insurer is allowed to question and investigate claims. However, the instances of "bad faith" with business insurers are rising, especially in the wake of the hurricanes and other market pressures on insurers.
Each state sets its own particular penalties for a proven "bad faith" breach by an insurer. All allow for punitive damages to punish the company and its acts. If you suspect that your dealings with your insurer have been less than fair or that the insurer is not following the terms of the policy in an unreasonable fashion, you will want to contact and discuss the matter with an insurance lawyer.
