Saturday, October 20, 2012


Automobile Diminished Value

SARASOTA, Florida - The world of Automobile Diminished Value keeps getting bigger and bigger. Just a few scant years ago, long after CARFAX started providing vehicle history reports, insurance companies who were liable for paying these types of claims denied that diminished value even existed. The insurers' mission to keep insurance consumers in the dark regarding their rights to collect for a vehicle's loss of value after it is repaired continues to this day. Has your insurance agent ever mentioned it? I didn't think so. This article is about how you are being scammed and not just by one insurance company. Virtually all of them are doing it but some, evidently, are a lot worse than others.

A man called me from Sarasota, Florida to inquire about obtaining an Automobile Diminished Value report from St Lucie Appraisal. His car, a gorgeous 2011 Audi R8 with 4,500 miles for which he paid $168,000, was damaged by another car that happens to be insured by Travelers Insurance Company. For anyone who doesn't know the meaning of Automobile Diminished Value, here's the quick read. When a  car is repaired after an accident, it becomes a "dirty CARFAX car" that is worth less than a similar car that had never been in an accident. That loss of worth is known as "diminished value" and in Florida as well as most states; you are entitled to collect it from the responsible party's insurance company.

So how does one determine the amount of diminished value a vehicle has suffered? The most commonly used approach by insurance companies used to be establishing  formulas that assigned points based on the type of damage, air bag deployment, etc. but various state courts decided these methods resulted in artificially low values that were unfair to consumers. A second manner of determining diminished value, the one used by most independent appraisers, is to cull the numbers from auction results that show a rough idea of how much less money previously repaired vehicles sold for vs. similar non-accident cars. The problem with that practice is that it fails to address the specific subject vehicle and the exact nature of the repairs that were done. Many of these reports are severely downgraded by insurance adjusters for that very reason.

The St. Lucie Appraisal Company gathers its Automobile Diminished Value data directly from used car managers at auto dealerships. They are the only ones who can provide an accurate estimation of how much less they would pay for the car based on the circumstances involving that particular vehicle. In the case of the 2011 Audi R8, the low mileage, 5.2 Liter V-10 engine, six-speed transmission and even the color played into each dealer's opinion. The repaired damage was minimal, $4,500 in sheet metal repairs with no structural impairment. Everything was in place for them to provide an honest opinion of how much less they would pay for this dirty CARFAX Audi.

Our practice is to obtain six dealer quotes in order to provide fair conclusions that can't easily be refuted. At the end of the day, the six dealer opinions averaged out to a diminished value of $14,620.50 on the 2011 Audi. That figure represents how much less the vehicle is worth because it was previously repaired.

So when I first got the call, it was with keen interest that I listened to my client's story about how the adjuster from Traveler's Insurance Company in Tampa, Florida had contacted him with a settlement offer of $500.00. That is not a typo. Traveler's offered this man five hundred dollars for the diminished value on his vehicle. There are laws that make it a crime to fleece unsuspecting folks but apparently not when it comes to this activity. The lowest of my six dealer quotes was $10K and if the insurance adjuster had simply made a telephone query to any auto dealer it would have provided a similar result. But that's not the way it works with insurance companies.

So be aware. Knowledge is power. Do not accept an insurer's Automobile Diminished Value settlement offer without first obtaining an independent appraisal from a licensed appraiser. Because once you've signed and accepted the insurance company's offer, the door to your receiving a fair settlement is closed.

paypal payment button The fee for an Automobile Diminished Value Report is $275.00. You may also make your Credit Card Payment by telephone, call 772-359-4300. Credit card payments can be made on the PayPal page. Click on "Don't have a PayPal account?" to be taken to the secure credit card payment page. 

After making your secure payment please email the body shop estimate or the insurance company appraisal to or FAX to 772-466-8400.