As most insurers are aware, diminished value is nothing new. In 1840 the Supreme Court in Massachusetts heard Samual Giles and Another v The Eagle Insurance (1840 WL 2097 (Mass.) wherein the court ruled in favor of plaintiff Giles.
There have been dozens of other cases from around the country since the introduction of the automobile that support diminished value as well.
In a 1922 case before the Supreme Court of Washington State, Madden vs. Nippon Auto Company, the judge ruled as follows,
“In the case of an automobile, many injuries are of such a nature that they can be made whole by repairs. In more serious injuries, other elements enter into the question when the cost of repair and the loss of use will not measure the total amount of the loss, and such for example, the element which witnesses before mentioned cited, the loss of sale value arising from the mere fact of injury.”
A 1923 case from New Jersey, Hintz vs. Roberts, later reaffirmed in the 1946 case of Parisi vs. Freidman, also supports the payment of diminished value by finding,
“the cost of repair and depreciated value of the vehicle is an appropriate measure of the damages so long as the sum does not exceed the decline in market value (the value before and after the accident without repairs)”
In a similar case before the Superior Court of Pennsylvania in 1931, Schrenk vs. Standard Accident Insurance Company, the court also found in favor of diminished value ruling that,
“One article of the policy provided that the policy should cover against actual loss or damage to an automobiles described in declarations. If the insured is entitled to his actual loss and damage then depreciation (diminished value) is properly included.”
In the 1929 case of Welter v Schell (252 Ill. App. 586) the court ruled that;
“Automobiles – depreciation in value as an element of damage. The owner is entitled to recover the amount which an automobile, damaged in a collision, has depreciated in value AFTER it has been repaired.”
Another early case from 1928, Borgmier v Wood (252 Ill. App. 194) echoes the same conclusion;
“The measure of damages where an automobile can be reasonably repaired is the cost of such repairs, and if the automobile, after it is repaired, is not in as good condition as it were prior to the time of it being damaged, the plaintiff may show the difference in value before the injury and after the repairs were made.”
In the 1964 case of Lucas v Bowman Dairy (50 Ill App. 2nd 413), the court used the wording from the Illinois restatement of torts as follows;
“Damages- Ordinarily, measure of damages to personality is reasonable cost of making repairs, but, if property after repair is worth less than before it was damaged, measure would be difference in market value before and after, in addition to reasonable cost of repairs.”
The insurance industry claims that allowing the policyholder to claim diminished value generally goes against the rulings in other states. This is yet another product of the spin machine of the insurers. A closer look at the cases the insurers cite would reveal that in the majority of the instances where diminished value claims have been denied, the cases did not properly support the plaintiff’s position.
The erroneous argument is often raised that the injured party does not actually incur this loss until the time of sale. This is totally inaccurate – the principle being discussed is VALUE.
Whether or not the automobile is sold is irrelevant – the stigma of the damage history reduces the value (fiancial worth) of the vehicle. The consumer is still obligated to make loan payments on a $20,000 vehicle, however, due to the damage history, the automobile only has a value of $16,000. Therefore, the VALUE has been deminished.
The “warning” issued by insurers that allowing such claims would set a precedent that necessitated an increase in premiums is nothin more than a scare tactic. While it may be true that an occasional, poorly-adminstered/poorly managed insurance company may go out of busness, the majority of the major insurers are recording record profits.
Additionally, if this argument holds any credence, the injured party is subsidizing the rest of the insureds. The individual who suffers the diminishment is out hundreds or thousands of dollars. Should they be forced to suffer the burden of this loss simply so their neighbors can save $50 or $100 per year on their premiums ?
The truth of the matter is that diminished value is calculated in the loss tables of the insurers, and every claim that they do not have to compensate for diminished value results in additional illicit profit for the corporation.
You write:
“i have seen several claims in which the DV amt. = up to 50% of the cost of repairs, based on the formula approved by the state.”
If you review the ruling of the court, they did not “approve” any calculation method. They merely accepted the formula – often referred to as “17c”, as an acceptable alternative in the lack of any other evidence of the amount of loss.
The trial court in Mabry has not imposed any particular claims handling procedure, but simply required that State Farm handle all of each claim. Subsequently, John W. Oxendine, Georgia Commissioner of Insurance, issued Directive No. 01-P&C-1 on December 7, 2001 which mandated that all insurers in the state “adjust claims accordingly, including assessment and payment of diminution of value”. The Commissioner’s Directive did not proclaim “17c” to be the proper measure either – the Directive makes no mention of the formula at all. In reality, it instructs insurers to “directed to review this case” [Mabry] – which would infer that the insurer should be aware of what the court has deemed to be the proper measure of loss.
Respectfully sumitted in the interest of accuracy,
2002 Chrysler Sebring Limited Convertible
about $3000 dmg (replace rt dr, glass & trim,repair lft qtr pnl replace some trim and paint/blend) Uninsured motorist rammed a vehicle parked next to the convertible knocking it into the Sebring and throwing the Sebring into a wall. Previously in excellent condition, and (after 3 tries) body shop repaired perfectly, literally cannot tell without a CarFax report the vehicle was damaged.
Allstate adjuster advised us to file a diminished value claim. They inspected the repairs and agreed no repair issues, only inherent DV. Then they asked me to get an estimate of the DV from a dealer and submit it to them. After going to 5 dealers, none of whom would dare put anything in writing, all claiming they would lose business from insurers if they dared to put anything in writing, I finally gave up and did my own research of the NADA and Kelley Blue Book value and calculated 13.8% DV. Allstate is balking at paying that and NOW they have hired their own hired gun (that they flew in from 400 miles away) to “appraise” the DV. He claims there may not be any diminished value. He didn’t have any response when I explained I now have 5 of the top dealers in my area that will not give me top trade in because they are armed with the knowlege that the vehicle was wrecked. They have all said they would pay less than if they didn’t know. Isn’t it obvious the vehicle has lost value?
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As most insurers are aware, diminished value is nothing new. In 1840 the Supreme Court in Massachusetts heard Samual Giles and Another v The Eagle Insurance (1840 WL 2097 (Mass.) wherein the court ruled in favor of plaintiff Giles.
There have been dozens of other cases from around the country since the introduction of the automobile that support diminished value as well.
In a 1922 case before the Supreme Court of Washington State, Madden vs. Nippon Auto Company, the judge ruled as follows,
“In the case of an automobile, many injuries are of such a nature that they can be made whole by repairs. In more serious injuries, other elements enter into the question when the cost of repair and the loss of use will not measure the total amount of the loss, and such for example, the element which witnesses before mentioned cited, the loss of sale value arising from the mere fact of injury.”
A 1923 case from New Jersey, Hintz vs. Roberts, later reaffirmed in the 1946 case of Parisi vs. Freidman, also supports the payment of diminished value by finding,
“the cost of repair and depreciated value of the vehicle is an appropriate measure of the damages so long as the sum does not exceed the decline in market value (the value before and after the accident without repairs)”
In a similar case before the Superior Court of Pennsylvania in 1931, Schrenk vs. Standard Accident Insurance Company, the court also found in favor of diminished value ruling that,
“One article of the policy provided that the policy should cover against actual loss or damage to an automobiles described in declarations. If the insured is entitled to his actual loss and damage then depreciation (diminished value) is properly included.”
In the 1929 case of Welter v Schell (252 Ill. App. 586) the court ruled that;
“Automobiles – depreciation in value as an element of damage. The owner is entitled to recover the amount which an automobile, damaged in a collision, has depreciated in value AFTER it has been repaired.”
Another early case from 1928, Borgmier v Wood (252 Ill. App. 194) echoes the same conclusion;
“The measure of damages where an automobile can be reasonably repaired is the cost of such repairs, and if the automobile, after it is repaired, is not in as good condition as it were prior to the time of it being damaged, the plaintiff may show the difference in value before the injury and after the repairs were made.”
In the 1964 case of Lucas v Bowman Dairy (50 Ill App. 2nd 413), the court used the wording from the Illinois restatement of torts as follows;
“Damages- Ordinarily, measure of damages to personality is reasonable cost of making repairs, but, if property after repair is worth less than before it was damaged, measure would be difference in market value before and after, in addition to reasonable cost of repairs.”
The insurance industry claims that allowing the policyholder to claim diminished value generally goes against the rulings in other states. This is yet another product of the spin machine of the insurers. A closer look at the cases the insurers cite would reveal that in the majority of the instances where diminished value claims have been denied, the cases did not properly support the plaintiff’s position.
The erroneous argument is often raised that the injured party does not actually incur this loss until the time of sale. This is totally inaccurate – the principle being discussed is VALUE.
Whether or not the automobile is sold is irrelevant – the stigma of the damage history reduces the value (fiancial worth) of the vehicle. The consumer is still obligated to make loan payments on a $20,000 vehicle, however, due to the damage history, the automobile only has a value of $16,000. Therefore, the VALUE has been deminished.
The “warning” issued by insurers that allowing such claims would set a precedent that necessitated an increase in premiums is nothin more than a scare tactic. While it may be true that an occasional, poorly-adminstered/poorly managed insurance company may go out of busness, the majority of the major insurers are recording record profits.
Additionally, if this argument holds any credence, the injured party is subsidizing the rest of the insureds. The individual who suffers the diminishment is out hundreds or thousands of dollars. Should they be forced to suffer the burden of this loss simply so their neighbors can save $50 or $100 per year on their premiums ?
The truth of the matter is that diminished value is calculated in the loss tables of the insurers, and every claim that they do not have to compensate for diminished value results in additional illicit profit for the corporation.
Respectfully submitted,
Patrick Yurek
President
Collision Consulting
You write:
“i have seen several claims in which the DV amt. = up to 50% of the cost of repairs, based on the formula approved by the state.”
If you review the ruling of the court, they did not “approve” any calculation method. They merely accepted the formula – often referred to as “17c”, as an acceptable alternative in the lack of any other evidence of the amount of loss.
The trial court in Mabry has not imposed any particular claims handling procedure, but simply required that State Farm handle all of each claim. Subsequently, John W. Oxendine, Georgia Commissioner of Insurance, issued Directive No. 01-P&C-1 on December 7, 2001 which mandated that all insurers in the state “adjust claims accordingly, including assessment and payment of diminution of value”. The Commissioner’s Directive did not proclaim “17c” to be the proper measure either – the Directive makes no mention of the formula at all. In reality, it instructs insurers to “directed to review this case” [Mabry] – which would infer that the insurer should be aware of what the court has deemed to be the proper measure of loss.
Respectfully sumitted in the interest of accuracy,
Patrick Yurek
President
Collision Consulting
2002 Chrysler Sebring Limited Convertible
about $3000 dmg (replace rt dr, glass & trim,repair lft qtr pnl replace some trim and paint/blend) Uninsured motorist rammed a vehicle parked next to the convertible knocking it into the Sebring and throwing the Sebring into a wall. Previously in excellent condition, and (after 3 tries) body shop repaired perfectly, literally cannot tell without a CarFax report the vehicle was damaged.
Allstate adjuster advised us to file a diminished value claim. They inspected the repairs and agreed no repair issues, only inherent DV. Then they asked me to get an estimate of the DV from a dealer and submit it to them. After going to 5 dealers, none of whom would dare put anything in writing, all claiming they would lose business from insurers if they dared to put anything in writing, I finally gave up and did my own research of the NADA and Kelley Blue Book value and calculated 13.8% DV. Allstate is balking at paying that and NOW they have hired their own hired gun (that they flew in from 400 miles away) to “appraise” the DV. He claims there may not be any diminished value. He didn’t have any response when I explained I now have 5 of the top dealers in my area that will not give me top trade in because they are armed with the knowlege that the vehicle was wrecked. They have all said they would pay less than if they didn’t know. Isn’t it obvious the vehicle has lost value?