This article detailing the appeal of Ibrahim vs. AIU Insurance company contains findings that basically boil down to semantics. “Diminished Value” is an acceptable terminology that describes a loss in value of a motor vehicle after collision repairs. The term “Stigma Damages” is simply redundant. The terms “pre-loss condition” and “pre-loss value” are also interchangeable for the purposes of any discussion regarding diminished value. Our company prepares automobile diminished value reports in all 50 states that are based solely on dealer opinions. At no time have we ever encountered a dealer who said that a vehicle that was returned to what the court termed “pre-loss condition” did not experience a loss in fair market value. Regardless of the quality of repairs and, indeed, the severity of the damage, the existence of a bad Carfax or other vehicle history report means, in the real world, that used car buyers won’t pay as much as they would for a previously unmolested car. Hence, dealers can not offer as much come trade-in time.
In the case of first-party claims, policy limits can and should apply. Insurance agents therefore have a responsibility to inform policyholders of this fact. Many policyholders would opt to increase their coverages. In the case of third-party diminished value claims there should be no limit set as to how much is recoverable as the liability portion of the responsible party’s policy clearly states their responsibility to make claimants whole.
Pre-loss condition means a vehicle didn’t have a bad Carfax. Post-loss condition, hence, post-loss value, regardless of how well repairs were made or how minor the damage was, means that it now does.
Pre-loss condition and Pre-loss value are not interchangeable terms. One talks about repair integrity and the other talks about cash values. They are not the same nor redundant, and are in fact separate topics of discussion. A vehicle can virtually be repaired back to the same condition that it was before the loss, if repaired correctly. As to whether someone trusts the repair or wants to pay the same price for an undamaged vehicle is an entirely different discussion.
Sadly, we cannot fully rely on “dealer” opinions regarding the loss of value for vehicles that have been repaired, as they are in the business to make money and maximize profits. The desire to maximize profits is certainly understandable, but they justify their undercutting of the customer under the guise of “diminished value.” They undercut trade-in offers for inherent diminished value and then attempt to sell the vehicle at full price or perhaps just slightly under retail price. I have seen this happen time and time again. If there is such a loss of value with repaired vehicles, where is the “diminished value” lots on the dealer property, because I’d like to get a sweetheart deal on a vehicle that has been repaired and will cost be $6000-7000 less (as these are often the ridiculous DV range amounts assessed by independent appraisers). Diminished value is something that has been created in order for dealers to make lots of money off of unsuspecting and uneducated customers. I agree that diminished value can potentially occur in losses where there is major structural damage and compromise, but customers continue to get undercut on trade-in values for relatively minor or moderate damages.
As well, your discussion of “policy limits” for first party customers is incorrect. First party customers almost never have policy limits for their coverage (unless they have a stated value policy). Policy limits apply to liability coverage, which pays claims to third party claimants. Any collision coverage has a limit only up to the actual cash value, so there are no limits to “increase” in order to pay for first party diminished value. As well, most insurance policies have a specific exclusion for first party customers against being able to recover diminished value. Why should someone be entitled to a diminished value payment when it was their own negligence that caused the loss in the first place?
Dealer opinions are the best barometer. We query dealers and obtain six verifiable quotes for the diminished value. All dealers are advised that the subject vehicle is not for sale or being traded. Thus, they have no vested interest in giving an inaccurate quote. Our success ratio before magistrates and mediators alike is astounding but only because our diminished value reports are done in a language that everyone can understand. When we have encountered insurance defense attorney’s whose appraisers used formulas, algorithms or auction results, our methodology won out every time (except one.)
We handle predominately third-party diminished value claims.
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This article detailing the appeal of Ibrahim vs. AIU Insurance company contains findings that basically boil down to semantics. “Diminished Value” is an acceptable terminology that describes a loss in value of a motor vehicle after collision repairs. The term “Stigma Damages” is simply redundant. The terms “pre-loss condition” and “pre-loss value” are also interchangeable for the purposes of any discussion regarding diminished value. Our company prepares automobile diminished value reports in all 50 states that are based solely on dealer opinions. At no time have we ever encountered a dealer who said that a vehicle that was returned to what the court termed “pre-loss condition” did not experience a loss in fair market value. Regardless of the quality of repairs and, indeed, the severity of the damage, the existence of a bad Carfax or other vehicle history report means, in the real world, that used car buyers won’t pay as much as they would for a previously unmolested car. Hence, dealers can not offer as much come trade-in time.
In the case of first-party claims, policy limits can and should apply. Insurance agents therefore have a responsibility to inform policyholders of this fact. Many policyholders would opt to increase their coverages. In the case of third-party diminished value claims there should be no limit set as to how much is recoverable as the liability portion of the responsible party’s policy clearly states their responsibility to make claimants whole.
Pre-loss condition means a vehicle didn’t have a bad Carfax. Post-loss condition, hence, post-loss value, regardless of how well repairs were made or how minor the damage was, means that it now does.
St Lucie Appraisal Co:
Pre-loss condition and Pre-loss value are not interchangeable terms. One talks about repair integrity and the other talks about cash values. They are not the same nor redundant, and are in fact separate topics of discussion. A vehicle can virtually be repaired back to the same condition that it was before the loss, if repaired correctly. As to whether someone trusts the repair or wants to pay the same price for an undamaged vehicle is an entirely different discussion.
Sadly, we cannot fully rely on “dealer” opinions regarding the loss of value for vehicles that have been repaired, as they are in the business to make money and maximize profits. The desire to maximize profits is certainly understandable, but they justify their undercutting of the customer under the guise of “diminished value.” They undercut trade-in offers for inherent diminished value and then attempt to sell the vehicle at full price or perhaps just slightly under retail price. I have seen this happen time and time again. If there is such a loss of value with repaired vehicles, where is the “diminished value” lots on the dealer property, because I’d like to get a sweetheart deal on a vehicle that has been repaired and will cost be $6000-7000 less (as these are often the ridiculous DV range amounts assessed by independent appraisers). Diminished value is something that has been created in order for dealers to make lots of money off of unsuspecting and uneducated customers. I agree that diminished value can potentially occur in losses where there is major structural damage and compromise, but customers continue to get undercut on trade-in values for relatively minor or moderate damages.
As well, your discussion of “policy limits” for first party customers is incorrect. First party customers almost never have policy limits for their coverage (unless they have a stated value policy). Policy limits apply to liability coverage, which pays claims to third party claimants. Any collision coverage has a limit only up to the actual cash value, so there are no limits to “increase” in order to pay for first party diminished value. As well, most insurance policies have a specific exclusion for first party customers against being able to recover diminished value. Why should someone be entitled to a diminished value payment when it was their own negligence that caused the loss in the first place?
Dealer opinions are the best barometer. We query dealers and obtain six verifiable quotes for the diminished value. All dealers are advised that the subject vehicle is not for sale or being traded. Thus, they have no vested interest in giving an inaccurate quote. Our success ratio before magistrates and mediators alike is astounding but only because our diminished value reports are done in a language that everyone can understand. When we have encountered insurance defense attorney’s whose appraisers used formulas, algorithms or auction results, our methodology won out every time (except one.)
We handle predominately third-party diminished value claims.