Diminished Value?
09-07-2013, 01:00 PM
#21
CF Senior Member
Member Since: Feb 2006
Location: Tucson Arizona
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Interesting thread. "...Georgia's Supreme Court set a precedent with it's decision in Mabry V. State Farm in which they ruled that inherent diminished value is a valid type of loss that insurers are obligated to pay..."
I vaguely recall reading in an old auto insurance policy (of mine) that the carrier does not insure for claims of diminished value. That would not preclude suing an at-fault party for such a loss but if common in the industry, I know insurance companies are loathe to pay for losses they don't insure against. Maybe that's all changed in recent years or perhaps on a state by state basis. I may have to dig out my current policy to see what it says about diminished value, if anything.
Thanks for all the information...it's been a good read!
I vaguely recall reading in an old auto insurance policy (of mine) that the carrier does not insure for claims of diminished value. That would not preclude suing an at-fault party for such a loss but if common in the industry, I know insurance companies are loathe to pay for losses they don't insure against. Maybe that's all changed in recent years or perhaps on a state by state basis. I may have to dig out my current policy to see what it says about diminished value, if anything.
Thanks for all the information...it's been a good read!
09-07-2013, 04:13 PM
#22
Cruising
Member Since: Nov 2010
Location: Fort Pierce Florida
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Diminished Value
Interesting thread. "...Georgia's Supreme Court set a precedent with it's decision in Mabry V. State Farm in which they ruled that inherent diminished value is a valid type of loss that insurers are obligated to pay..."
I vaguely recall reading in an old auto insurance policy (of mine) that the carrier does not insure for claims of diminished value. That would not preclude suing an at-fault party for such a loss but if common in the industry, I know insurance companies are loathe to pay for losses they don't insure against. Maybe that's all changed in recent years or perhaps on a state by state basis. I may have to dig out my current policy to see what it says about diminished value, if anything.
Thanks for all the information...it's been a good read!
I vaguely recall reading in an old auto insurance policy (of mine) that the carrier does not insure for claims of diminished value. That would not preclude suing an at-fault party for such a loss but if common in the industry, I know insurance companies are loathe to pay for losses they don't insure against. Maybe that's all changed in recent years or perhaps on a state by state basis. I may have to dig out my current policy to see what it says about diminished value, if anything.
Thanks for all the information...it's been a good read!
09-07-2013, 05:03 PM
#23
You're presenting a hypothetical that will never exist. No two cars are ever identical. There are always features, color, mileage, tire condition, optional pkgs., wheels, ownership information, etc., that will cause me to opt for one car over the other, always.
However, let's take a realistic scenario.
Two 2008 'vettes, both with identical pkgs., features, identical color, and appear to be in similar cosmetic condition which we'll describe as excellent. Both are bone stock. Neither car was abused, or raced.
Here are the differences. One of them was a garage queen, only driven on weekends, and clocked only 19,000 miles. It's a one owner vehicle, with all maintenance records available, and was clearly well maintained. The owner just recently purchased a brand new set of Bridgestone Pole Position tires. However, a CarFax report shows that this vehicle was popped in the butt 3 years ago, and was repaired for $4,000. I check on where the repairs were made, and have my own expert thoroughly inspect the car. Everything is on specs, and an excellent repair was made having no detrimental effects on this car.
The other 'vette was a daily driver, that has seen 3 different owners, and has clocked 47,000 miles. Because of multiple owners, there are no verifiable maintenance records available. The car looks very sharp, and the tires are in very good shape with only 3/32 of wear. There is no record of this vehicle having ever been involved in an accident, or having undergone any repairs.
Both owners are asking the same price for their vehicle. I am attracted to the 'vette with less mileage, and new tires, and excellent maintenance records. However, it's got that nasty CarFax report, what do I do? Simple, I buy the car with the previous repair, and I pay the same price. Why? Because I am getting a lower mileage, vehicle with new tires, and maintenance records, and most importantly, I've already verified that the repairs were excellent, and did not degrade the car in any way.
In my opinion, there is no inherent diminished value, simply because it was damaged. At the same price, it's still a better deal than the one with the clean CarFax report.
There is no question that many folks would walk away from the better buy because it was damaged, and that scares the heck out of them. That's ok, it leaves more options for folks like me.
However, let's take a realistic scenario.
Two 2008 'vettes, both with identical pkgs., features, identical color, and appear to be in similar cosmetic condition which we'll describe as excellent. Both are bone stock. Neither car was abused, or raced.
Here are the differences. One of them was a garage queen, only driven on weekends, and clocked only 19,000 miles. It's a one owner vehicle, with all maintenance records available, and was clearly well maintained. The owner just recently purchased a brand new set of Bridgestone Pole Position tires. However, a CarFax report shows that this vehicle was popped in the butt 3 years ago, and was repaired for $4,000. I check on where the repairs were made, and have my own expert thoroughly inspect the car. Everything is on specs, and an excellent repair was made having no detrimental effects on this car.
The other 'vette was a daily driver, that has seen 3 different owners, and has clocked 47,000 miles. Because of multiple owners, there are no verifiable maintenance records available. The car looks very sharp, and the tires are in very good shape with only 3/32 of wear. There is no record of this vehicle having ever been involved in an accident, or having undergone any repairs.
Both owners are asking the same price for their vehicle. I am attracted to the 'vette with less mileage, and new tires, and excellent maintenance records. However, it's got that nasty CarFax report, what do I do? Simple, I buy the car with the previous repair, and I pay the same price. Why? Because I am getting a lower mileage, vehicle with new tires, and maintenance records, and most importantly, I've already verified that the repairs were excellent, and did not degrade the car in any way.
In my opinion, there is no inherent diminished value, simply because it was damaged. At the same price, it's still a better deal than the one with the clean CarFax report.
There is no question that many folks would walk away from the better buy because it was damaged, and that scares the heck out of them. That's ok, it leaves more options for folks like me.
I live in MI. so I have no skin in this game. No DV in MI.
If the 19k car was not repaired would it still be at the same price point as the unrepaired 47k car? I think not.
Lets not forget that you set up an unequal buy with your mileage difference.
Make both cars with the same mileage and ask which one the buyer wants!
I know you still don't see a perfect repaired car as worth less money, but it is. It was damaged and repaired.
Have you seen the price that BJ cars are getting for unmolested cars? My money my call!
It seems the Insurance industry has an issue with things like CarFax. Too bad a car can be fixed perfect and the buyer should find a red flag.
All Insurance companies want to pay the least amount of money possible. That's their focus , my well being is not!
If it where we would not end up in these pissing matches.
I like the thread however, it has it's merits from both sides. I just like mine better! .
Last edited by BLD.70DRIVERMPG-RET.; 09-07-2013 at 06:07 PM.
09-07-2013, 06:46 PM
#24
Le Mans Master
Ok, you certainly have a right to like your side better!Ever wonder why Michigan doesn't recognize the existence of diminished value as a viable loss? Ever ponder the reasons why DV is such a variable in so many states where it is recognized?
Hey, that's ok, like I've said, I know my opinion is in the minority, that's ok, I can handle it.
09-07-2013, 07:08 PM
#25
Ok, you certainly have a right to like your side better!Ever wonder why Michigan doesn't recognize the existence of diminished value as a viable loss? Ever ponder the reasons why DV is such a variable in so many states where it is recognized?
Hey, that's ok, like I've said, I know my opinion is in the minority, that's ok, I can handle it.
Follow the money . Why is that?
09-07-2013, 10:17 PM
#27
Burning Brakes
Diminution of value is absolutely a real and valid loss....anyone, who has ever been presented a choice to buy one of two cars all else being equal other than prior damage to one, or has tried selling a car previously damaged car, knows this simple concept to be true: prospective buyers are less likely to purchase a previously damaged/repaired product. This holds true for any product.
Most insurance companies will not initially offer any diminution of value up front, but will usually not argue much against a reasonable claim as courts have upheld these claims to be absolutely valid. Any lawyer worth his/her salt will ask diminution of value and so too should any person choosing to bypass the lawyers and communicate directly with another person's insurance company.
Anyone arguing otherwise either stands to benefit for refusing a diminution of value claim or is simply not understanding the concept of diminution of value.
OP's comments even back this up... the "at-fault's" insurance company isn't denying that a diminution of value has occurred and isn't attempting to not pay the diminution of value claim, they are only trying to negotiate the specific value that has been diminished.
Most insurance companies will not initially offer any diminution of value up front, but will usually not argue much against a reasonable claim as courts have upheld these claims to be absolutely valid. Any lawyer worth his/her salt will ask diminution of value and so too should any person choosing to bypass the lawyers and communicate directly with another person's insurance company.
Anyone arguing otherwise either stands to benefit for refusing a diminution of value claim or is simply not understanding the concept of diminution of value.
OP's comments even back this up... the "at-fault's" insurance company isn't denying that a diminution of value has occurred and isn't attempting to not pay the diminution of value claim, they are only trying to negotiate the specific value that has been diminished.
Last edited by kozmic; 09-07-2013 at 10:20 PM.
