diminished value

Posted: Tue May 26, 2009 11:34 am Post Subject:

but would bet they allow them

27. CHOICE OF REPAIR SHOP AND REPLACEMENT PARTS. You have the right to choose the repair shop and replacement parts for your vehicle. An insurance company may not specify the brand, type, kind, age, vendor, supplier, or condition of parts or products used to repair your automobile. The insurance company must provide you notice of the above requirements as follows:

· claims submitted by telephone – written notice within 3 business days or immediate verbal notice, followed by written notice within 15 days;

· claims submitted in person – immediate written notice at the time you present your vehicle to an insurer or an insurance adjuster or other person in connection with a claim for damage repair;

· claims submitted in writing – written notice must be provided within 3 business days of the insurance company’s receipt of the notice.

Posted: Tue May 26, 2009 01:43 pm Post Subject:

Thanks to all. My bumper is chromed metal, with a plastic cover only on the top. I guess I could live with a salvaged oem replacement. What would I look for? Wouldn't want one that had been marinated in salt water.

No "aftermarket parts" language in my current policy. Guess my memory cells have too many miles on them.

Reg 27 is most interesting. But, lori, I'm not so sure it's easy to finesse the argument that the recording of collisions on Carfax reports results in an immediate loss of market value.

Steve, I think the Texas Supreme Court has rejected "dv" in the first-party context (see Kevin's note.) The policy language applicable only to first-party claims is crucial. My "class action" comment goes to the fact that it's not so easy for third-party claimants to show a common violation of a duty owed directly to them under the policy.

Posted: Tue May 26, 2009 04:13 pm Post Subject:

With regard to first party DV under umpd, here is one suggested reason that they are more willing to settle DV claims

In a third party setting, the insurer can delay, deny, stall … the whole routine, with little or no repercussions. In a first party claim, with the contract in force, the insurer is forced to walk a tight line, or face breach of contract and potential bad faith charges (and lawsuits).

Posted: Tue May 26, 2009 05:26 pm Post Subject:

Well, they must be "running scared" of something. I'm sure it goes against the grain to feel obliged to initiate discussion of "dv."

Just got back from the shop. They're using all oem parts, even the quarter panel. I guess metal straightening is out of style. So, no Hurricane Ike parts to worry about.

I'm rather disinclined to press a "dv" claim at this point. I'll probably just invite them to make an offer. (Gee, Mr. Fast Track, what would you request if you were me?) I'll see if I can find out what their policy is.

Posted: Tue May 26, 2009 06:43 pm Post Subject:

Here is the Georgia 17C formula that most insurers and independent appraisers hired by insurers use. You can calculate what they will offer based on it. A diminished value appraiser would not use this formula because of it's inherent flaws and would take each vehicle and judge it according to various elements based on knowledge and expertise of the collision repair process and how it would affect the resale value, trade in value, private party values.

Here is the actual formula and explanation:
ELEMENTS OF LOSS OF VALUE FORMULAS
ACV - For purposes of our calculations, we will use the NADA retail value, including additions and
subtractions for options and mileage. The NADA edition applicable at the time of loss of value claim is
presented should be used.
BASE LOV - As is the case in most loss of value formulas, we will use 10% of the ACV as a starting point
in our formula.
DAMAGE SEVERITY MODIFIER - This is the subjective decision which must be made by the adjuster.
The nature and extent of damages should be based on the actual physical damage sustained by the vehicle,
without using the cost to repair as a basis. The modifier can be from 0.0 to 1.0 with 1.0 reflective of
extensive damages. It should be stressed that in some minor accidents the 0.0 modifier is appropriate as no
loss of value would have been sustained. A basic guide for the damage severity modifier is as follows:
MODIFIER EXTENT OF DAMAGE
1.0 Severe damage to the structure of vehicle.
0.75 Major damage to structure and panels.
0.50 Moderate damage to structure and panels.
0.25 Minor damage to structure of vehicles.
0.0 No structural damage and replaced panels.
As this is subjective decision, the modifier can be adjusted as necessary to fit the damages. (EXAMPLE 1 -
No frame damage, a replaced bumper and repaired body panel may call for a modifier of 0.1.
EXAMPLE 2 - Heavy frame damage to the front with moderate additional damage to the rear may call for
a modifier of 0.85.)
MILEAGE MODIFIER - Generally, when a vehicle reaches 100,000 miles, it no longer has a realistic
market value. There may be some cases where that is not so, but for most cars this figure should be
accurate. The modifier is a factor of the actual mileage of the vehicle and the mileage where the vehicle no
longer would be considered for retail resale by a dealer. The modifier can be from 0.0 to 1.0 reflective of
zero miles. A basic guide for the mileage modifier (based on 100,000 mile limit) is as follows:
MILEAGE MODIFIER
0 1.0
20,000 0.8
40,000 0.6
60,000 0.4
80,000 0.2
100,000 0.0
The modifier should be adjusted to reflect the actual mileage based on the following:
MODIFIER - MAXIMUM MILES FOR RETAIL SALE - ACTUAL MILES
MAXIMUM MILE FOR RETAIL SALE

Posted: Tue May 26, 2009 11:13 pm Post Subject:

I saw a formula like that the other day. It was on a blackboard in a documentary about the Manhattan Project.

Here's what Little Birdie tells me: State Farm will not, based on the language of the comp and collision coverages, entertain first-party claims for "dv." They will raise the potential of a "dv" claim "up front" only under the umpd coverage.

Posted: Wed May 27, 2009 09:58 am Post Subject:

Actually in most states 3rd party DV is easier to get...no policy language to the contrary...clearly something has 'happened' in the great state of Texas that is requiring the reps to mention this...don't think for a second that was not a part of the required script...(somebody must've got themselves into some trouble :wink: )....

I'll be anxious to hear what their offer is...also happy for you re: the a/m parts....I'll have to try and keep in the old bean that TX too is a 'permission' state regarding same...

Let us know how it goes Flint....

Posted: Wed May 27, 2009 10:12 am Post Subject:

Mike no offense, but I hope MO never adopts 1st party DV, all that 'mathy' stuff makes my pretty little head hurt.. :roll: :wink: (ok ok I have other reasons too :wink: )

They will raise the potential of a "dv" claim "up front" only under the umpd coverage.

Posted: Wed May 27, 2009 04:58 pm Post Subject:

Here's another can of worms: I'm examining, literally under a magnifying glass, the fine print in my Enterprise rental agreement. I quote: Damages for which renter is also responsible include. . .diminishment of value. . . .

There's a discussion of this by one Jim Hunt of Bell-Anderson Insurance, What You Don't Know about Renting a Car Can Cost you!, (3-30-08.) Mr. Hunt comments, with respect to "diminished value" claims, "Those few companies still covering damage to a rental car under the liability section of the auto policy may be obligated to pay the entire bill. However, when coverage is found only under the physical damage section, most insurers will not accept responsibility."

Disturbingly, Mr. Hunt claims that rental companies, reluctant to return repaired cars to the fleet, will typically dispose of damaged cars as salvage, and try to whack you for the difference between pre-accident acv and salvage value.

Posted: Wed May 27, 2009 08:08 pm Post Subject:

I have a friend who owns and operates a Hertz rental business. He shared with me that when Ford supplied their vehicles, they had an automatic buy back provision for trade ins on new upgrades. That value went out the window and they would not offer to buy back cars with accident histories. Sorry see u later, no dice, no dealio. Selling it on the open market became the only option or dealer auctions. Most of the program cars dealers use to sell were returned rental purchases that had service records and no accident histories so they could sell them certified.

The public perception has always been that a wrecked vehicle would never be as good as it was before. I think there was a time in the 80's pre front wheel drive era when most shops acquired frame repair equipment that became old history. But as vehicles have emerged with new technology and precise fitting parts and unibodies, the public has a new perception that the technology has surpassed the average shops or techs ability to repair to preloss condition additionally hampered by third party interference that is looking for cheaper and faster repairs. Not always the case, but too many repairers are cutting corners while insurers are cutting costs and it is the consumer that is harmed unless they monitor their repairs and contractual promises, in my opinion.

Hence many things contribute to the loss in value of used cars that have accident histories. I believe one solution would be third party certified inspectors that have the experience and training to ascertain that the car has been contractually repaired per contract of insurance to as near pre-loss as humanly possible and to grade the quality of the repair.