OK let’s get this out of the way first. I'm not a lawyer. I am not offering legal advice in anyway. I am presenting only my opinion based on information that is correct only in the context of the way I remember it. I take no responsibility for the accuracy of the information as I am going off of memory and I am only offering my opinion.
Remember, you are entitled to have your automobile restored to pre-loss condition and pre-loss value. Most insurance companies focus only on the pre-loss condition. Because it is proven that a car that has sustained major damaged is worth less than an un-wrecked car, the at-fault party, and subsequently their insurer, owes for the depreciation.
First a bunch of background information.
If you have not done so, after you have gather all of your information, inform the third-party insurance company in writing that you are going to file a Diminished Value (DV) claim . There are a number of example letters that can be found on the internet. Remember your DV claim has to be reasonable and supportable. if you are driving the a 1972 Pinto don’t expect to be taken seriously. Initially be open and consider any offer they make. Generally speaking, a rough starting point for a DV estimate is about 10 to 15% of the cost of repair. The lower end applies to older cars and cars with less damage. The newer the car and the higher the repair estimate move you up the scale. If you have an exotic car that is outside the norm that the insurance company sees, find a DV expert and pay them to handle the estimate. This is a case where you would want to contact expert from the beginning to handle the estimate. It will cost you some up front but you may be able to recover that in your claim. The purpose of this is to generate good and verifiable documentation to support your claim. Most insurance assume you don’t have the good and verifiable documentation so they make you an offer based on their DV software.
If they make you an offer that is within this range and you find it acceptable, especially if you don’t intend on selling the car and the damage was not extensive it may make sense to take the offer or make a small counter. Your research may find out that most insurance companies use a version of State Farm’s ultra-conservative Formula "17c" software to make these initial calculations. So you will be leaving something on the table if you take it but you have to decide what it’s worth you to go further.
If it was a major accident and you are planning on selling the car because you will never drive it again then start the process immediately.
Before you start a claim you have to consider a couple of factors. Again, if your car is a 1972 Pinto that has 250,000 miles on it, you probably don’t want to put the time and effort into a claim. But if you have a very new low mileage car with extensive damage, it will be worth your time and effort to not accept any offer from the insurance company and take the steps required to maximize your claim. The first thing you need a grasp of is the dollar value for the repair. If your car has been involved in a major accident, the initial estimate is never the final amount so you may want to wait until the repairs are done but I never took that approach. One of the most important things you can do is to carefully document the condition of your care before any repairs are started. Take tons of pictures and ask to be present at each stage of the disassembly to determine the extent of the damage for the estimate. For example, if they remove a fender to check for other damage, you want a photograph of that before the fender is put back on. Otherwise it becomes more difficult to determine if the insurance estimator or the shop missed something. Do the same thing for each stage of the repair. If a shop has to paint a car several times to get it correct, an inspection of the car by an expert will detect that the inferior repair and it will further lower the value of the car. Before you turn over the car for repairs, make sure that you tell the shop that you want to inspect all of the parts that are removed prior to re-installation and all parts replaced prior to disposal. Of course, it is best to mark all of the parts that you think will be replaced with an identifying mark like a sharpie and take photos of them. It is amazing how flustered a shop becomes when you point out to them that the part that they say was replaced did not come from your car. It is amazing how the final bill increases when you take this approach.
To start the process you have to look at all of the sources of DV claims estimates that are available to you. You can use the ultra-simple approach of going through the Autotrader Marketplace or like process and entering the values for pre and post-accident. May be worthwhile if you are just looking for a little bump from the insurance company but it generally does not carry a lot of weight with the insurance companies as the will not see this as good and verifiable documentation.
Another option is get an estimate from your dealership. This is possibly the easiest and fastest way to get a price for the value of an automobile, but it is not known for being the most accurate. Next you can take the approach of using an online source like
http://www.dvassess.com/. But again, most insurance companies choose to not pay any attention to these “instant” reports. But if you think raising the DV estimate a couple of hundred bucks would make you happy then this may be an option. But remember many of these services get their values from the same service as the insurance companies and their software may be based on the conservative Formula "17c" approach.
But if you are really under the impression that you have a substantial DV claim you can only generate the good and verifiable documentation that will be required to support your claim by having a DV expert complete through and comprehensive examination of the vehicle. By reviewing all of the claim paperwork, including the insurance estimate, invoice for the repairs, and actually having an expert inspect the car you will be able to obtain documentation that the insurance company will have a hard time disproving. I will leave it to the individual to find a company to do the DV assessment. But these companies generally offer a desk and a field appraisal. I think the fees for the field appraisal are like $100 more than the desk. So depending on the value of your expected claim, you have to decide what is best. But the field appraisal always generates higher quality documentation and often the inspection identifies damage not noticed by the owner or that was overlooked by the insurance company. While I have always done the field appraisal, some rules of thumb to determine if you should get a field appraisal are, if there is frame or structural damage, airbags deployed, damage is $5,000, you have concerns repair quality (like being required to use a “preferred” repair shop), or you are submitting a DV claim above $2,000.
My general approach is as follows. First I talk with the insurance company and ask them what their process is for DV claims. You have to know their rules. If they have them in writing get a copy. I let them know I understand DV and that there can be a wide range in how the estimate is done and what value is generated. I let them know my expectations are reasonable (10 – 15% of the repair cost) and would be willing to consider offers in that range. Most of the time this results in a mid-range offer from them. If it is a low ball offer or they said they don’t pay DV because they are restoring your car to pre-accident condition then go get your appraisal done. Remember any additional amount you spend on backing up your claim should be less than what you hope to increase your claim by. So you may want to do some of the initial cheap steps to see if trying to get more money is worth your time. When you come back and tell them your research shows that it should be higher just give them the amount. Don’t formally present the information yet because they usually assume you have not done your homework and say that there has to be documentation of that amount. When you say you have an appraisal and comment that it represents good and verifiable documentation of your claim, they lose their option of relying solely on their ultra-conservative software and have to either accept your documentation or go through the process of producing their own. This is the point at which I have settled all of my claims.
ELLIOT!
Dohworryboutit.
