Diminished Value

What Really is Diminished Value ?

Diminished Value is the amount by which the resale value of a damaged (or damage repaired) vehicle has been reduced for having a significant damage history. There are actually three (3) broadly accepted types of Diminished Value . . .

1. Immediate Diminished Value is the difference in resale value of a vehicle immediately before damage has occurred and immediately after damage has occurred (prior to repair). Most jurisdictions (courts) will use this standard as the primary measure of damage when courts are employed to seek reimbursement for damage from a negligent party. As courts are rarely the chosen venue for recovery of property damage, the standard of “Immediate Diminished Value” is rarely employed in resolving Diminished Value Claims . . .
    
2. Inherent Diminished Value assumes optimal repair quality has been achieved and is defined as the amount by which the resale value of a repaired vehicle has Not been restored via the repair process. “Inherent Diminished Value” is the most widely recognized and accepted form of Diminished Value. It is also the basis upon which any supplemental form of Diminished Value would be added. A common “Supplemental” form of Diminished Value is “Repair Related Diminished Value” . .
   
    
3. Repair Related Diminished Value includes any additional amounts by which the resale value of a subject vehicle may be further reduced because of less-than-optimal repairs. This could include anything from minor cosmetic imperfections to major structural defects.

Has My Vehicle Suffered a Diminished Value ?
The only blanket answer here would have to be “Yes” ~ “No” ~ or “Maybe”. The newer the subject vehicle, in better pre-loss condition, with no significant prior damage history, with significant current damage - the more resounding the “Yes” answer becomes . . . The older the subject vehicle, in lesser pre-loss condition, with a significant prior damage history and minor current damage - the more deafening is the “No” answer . . . The more circumstances moderate between these two extremes the more your true answer will fluctuate !

How Do I Know for Sure ?
Reasonable people can apply common sense to the “Yes” ~ “No” ~ “Maybe” guidelines referenced above to arrive at a reasonable degree of probability. The greater the probability, the more justified it becomes to call upon Collision Service Investigators of North Carolina to counsel you further.

How Do I Find a Diminished Value Professional ?
This question actually has the potential for more Problems than one might first imagine. Over the past few years, the pool of diminished value “Appraisers” has mushroomed out of control. The insurance industry even seems to be underwriting some of the Late Entries in an effort to Minimize Payments on Diminished Value Claims.

We at Collision Service Investigators of North Carolina aggressively represent the true interests of North Carolina Consumers.

How Do I Collect Diminished Value ?
It is universally acknowledged, in every state, that Diminished Value is owed by the liable (at-fault) party that caused the Diminished Value damage. If the liability insurance carrier for the at-fault party owes for repairing your damaged vehicle, they owe for the Diminished Value as well - It’s just that simple !

While it has been universally accepted that Diminished Value is owed to not-at-fault victims (3rd party claimants), courts are generally taking the position that insurance companies do Not owe Diminished Value damages to their own insured's under their policy’s Collision or Comprehensive coverage's. However, there are three states where insurance companies Do owe Diminished Value to their own policyholders – Georgia, Kansas and North Carolina . . .

Georgia’s Supreme Court, in the matter of “Mabry vs State Farm”, has determined that Collision and/or Comprehensive coverage written in Georgia DOES cover Diminished Value for their own policyholders. As part of that determination, the Georgia Court directed State Farm to develop a method by which Diminished Value could be measured. State Farm came up with a Highly Conservative method for measuring Diminished Value which the court approved and is now referred to as “Rule 17c”. When you negotiate your Diminished Value claim with an insurance company, they may well tell you the method for measuring Diminished Value has been “Ordered” by the Georgia Supreme Court. That is not quite true.
Rule 17c is actually the court “Approved” (fall-back) method of measuring Diminished Value in the absence of any other documented measure of damage. A Diminished Value Report received from Collision Service Investigators of North Carolina is a Documented Measure of Damage that prevails over the Rule 17c method.

UPDATE . . .
There are now some recent entrants into the Diminished Value arena offering to collect Diminished Value for consumers on a contingency fee (percentage of what they collect) basis. While we initially welcomed them into the Consumer Advocacy effort, we are now finding out such services are simply collecting Diminished Value based upon the Rule 17c formula (what the insurance company is already willing to pay) and then taking a portion of your money for having simply provided clerical services.

NOTICE . . .
IF you choose to pursue the “Contingency Fee” avenue, you will most likely Net Less than if you negotiated with the insurance company directly - AND - IF you go that route, you may be waiving your opportunity to deduct the remainder of your “Unrecovered Casualty Loss” from your income taxes.
As a resident of North Carolina, if your own insurance company is not being reasonable as to the amount of your Diminished Value claim, you can resolve the dispute by exercising your policy right of “Appraisal”.   To learn more about your rights under the "Appraisal" clause of your policy, go to the  Settle Auto Insurance Claims text on the iCan web site (will open in a separate browser) and pay particular attention to Discussion topic # 11.
 

What if the Other Insurance Company Won’t Deal in Good Faith ?
Take heart, you still have options . . . in fact, you have at least Three Options . . .

1. If the other insurance company acknowledges they owe for your Diminished Value, but you are unable to agree as to the Dollar amount, offer to reach a compromise method of defining the Diminished Value amount, as follows . . .
   
    
   1. Reach an agreement as to the pre-loss value of your vehicle . . .
   2. Offer the subject vehicle for sale to the highest bidder, at open auction, fully disclosing the details of the damage history . . .
   3. The difference between the pre-loss value, and the auction sales price, defines the Diminished Value dollar amount.
      
       
2. If the other insurance company is completely unreasonable and refuses to negotiate what-so-ever, you have the right to sue their policyholder in “Justice” or “Small Claims” Court. Such courts are ”Judge Judy” in format - Require Low to No Fees - Can be resolved in a short period of time and most such courts have jurisdictional authority sufficient to cover the amount of most Diminished Value damages.
   
    
3. Use our Diminished Value report to Reduce your Income Tax Obligation. Any portion of your Diminished Value that you do not collect, is an “Unrecovered Casualty Loss” and, as such, could be deducted from your Income Taxes to Reduce the amount you have to pay the IRS. This is true regardless of fault or how the unintended damage occurred - That which you have not collected, is deductible - No matter who was at fault.

As you can see, a Diminished Value Report from Collision Service Investigators of North Carolina empowers consumers with options. You can use our report to Collect Fully from your own insurance company [or] the at-fault party’s insurance company [or] you can reduce your income tax liability [or] you can do a little of Both !

Income Tax Deduction ? ? ?
Yes - IF you itemize your deductions, use Line # 19 of Form 1040 - Schedule “A” to Deduct your un-recovered Diminished Value. Assuming you have an un-recovered Diminished Value of $ 2,000 and a tax rate of 20%, you can Reduce Your Tax Obligation by almost $ 400.00 - well more than the cost of the Diminished Value report itself - You can even Deduct the Cost of the Diminished Value Report on Line # 22 of Schedule “A”.

Review IRS Form 1040 - Schedule “A” and Form # 4684 with your tax advisor.

How Do I Get a Diminished Value Report ?
Most of our discussion here has dealt with the issue of Money. While important, we consider SAFETY to be Much More Important! Not only are we concerned about the future occupants of your vehicle but, we are equally concerned about the occupants of all the other vehicles with whom your repaired vehicle will be sharing the road.
We at Collision Service Investigators of North Carolina will inspect your repaired vehicle to evaluate multiple Safety and Reliability factors. We are qualified to evaluate both “Inherent Diminished Value” and “Repair Related Diminished Value” so as to provide a fully comprehensive report.  You can call us at 704-216-0081.

Outside North Carolina ?
We suggest you go to D/V Professionals on the iCan web site (will open in a separate browser) to see who may be listed in your area. If there is no listing for your area (iCan is picky about who they accept), plan on having your vehicle checked out by a mechanic you can trust and Order Direct from iCan to receive their “Inherent Diminished Value” report.

This text reprinted with permission of the Insurance Consumer Advocate Network.

 

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