Monday, November 18, 2013

Diminished value

Regular readers might remember the unfortunate circumstances surrounding my new car back in the summer. Three weeks after taking delivery of it, a woman who was paying more attention to the kids in the back of her minivan than she was to - you know - driving, ran into me causing a wreck. It was a fixable wreck, fortunately, but about the biggest issue on my mind at the time was this : the CarFax report for my car was now going to reflect an accident, and thus when I eventually come to sell or trade it, it's going to be worth less.
So I did a little research and there's a term used by the insurance companies called 'diminished value' or 'diminishment of value'. It reflects what the insurance company deems to be the difference in value of the car before and after the accident. Ie. when you go to sell it - that loss you make should be covered by a diminished value claim.
I'm not sure what it's like in Europe - it's been a decade since I lived there - but in the US it's only law in certain states that the insurance companies pay out these sorts of claims. Where I live, it's not law, so I figured I'd ask, expecting to get nothing. I called the woman's insurance company right up front and asked about it and they said they'd investigate a diminished value claim once all the repairs had been made and I was back in my vehicle. True to their word, a week after my car was returned to me, I had a call and they said they were processing the claim, despite not being legally obliged to do so. I think in my case it was likely because the car was essentially brand new. Either way, they told me it would be a percentage of the cost of the repair.
The week after that, they called me again and gave me the valuation. I'm not going to tell you what it was, but I'm more than happy with it and it's four times what I was expecting once I discovered they were likely to fill the claim. I had to sign a release, meaning that I cannot pursue them for any more damages based on this particular accident and claim, but that's standard stuff.
So what did I learn? Well at one point in the process I did actually speak to a lawyer to ask if it was worth pursuing the diminished value claim, and he advised me not to bother because it would be an uphill battle in this state. That's why I was prepared to get nothing, so when I did get a payment, I was more than happy.
I feel at this point I really ought to mention the insurance company given that they get nothing but a bad reputation : State Farm. In my case they dealt with me fairly and politely and didn't quibble about anything. I didn't particularly want any of this to happen, but in the end, it all appears to have worked out nicely. In reality, that's all you want from an insurance claim.

2 comments:

Anonymous said...

I was wreaked a few years ago when a lady in a blue Saturn decided she didn't want to be in the exit lane that would take her onto a tollway, and she just merged over into a white Toyota, who was pushed into my Red Mitsubishi. It was a pain in the butt to get the police report so I could file my claim against the Saturn, and once I had, they started giving me the run around. I was desperate, I was out a care that I still owed thousands on, and there was looking like no way I was going to get restitution. So I called the Toyota's insurance, he had State Farm. The SF agent handling his claim was friendly and actually helped answer my questions, even though I wasn't her customer. The fact that she gave that measure of assistance to a non-customer made me feel like she was committed to living up to their jingle. With her help, I was able to finally get my claim against the Saturn's insurance processed, and into another car.

Tony Rached said...

Chris, it's great that you were properly compensated for your loss; unfortunately, most claimants are not aware of Diminished Value and never ask for it. Good job.