You are involved in a car wreck, and you are not at fault. Not only are you in pain, but your car has extensive damages. Hundreds of thoughts are going through your mind right now, one of which is knowing that this car wreck will significantly impact your car’s value. Below we will thoroughly discuss your rights and how the at-fault party’s insurance company evaluates your diminished value claim.
1. The claim.
The claim process is separate and distinct from your personal injury and property damage claims. In your personal injury claim, you are claiming Special (out-of-pocket expenses) and General (the amount of pain you’ve endured) damages. In your property claim, you are getting your car repaired. A diminished value claim is where we seek reimbursement for the total dollar amount that your car’s value is reduced by because of the wreck. You will first need to have your vehicle inspected by a diminished value expert who will then develop a diminished value of your car. You will then need to submit that report and a demand letter to the insurance company for payments. They will have 60 days to evaluate your demand and either accept or reject your demand. Please note that a counter-offer is the same as the rejection of your offer.
Example: You submit your diminished value report to an insurance company and request a response in 60 days for $4,000.00. However, the insurance company sends you a counter-offer for $3,000.00. This counter-offer is now a rejection of your demand.
2. When can you qualify to have a claim?
If your car is a total loss, you wouldn’t even qualify for a diminished value claim. Let’s face it; you won’t even have a car. Your claim would be the total value of your car, property damage claim.
3. What is the standard used by insurance companies to evaluate your DV claim?
Georgia case law has mandated the insurance companies to compensate their insured for the loss of value of their car. One method is using a 17(c) formula. In an effort “to clarify the Department’s position on diminished value claims,” the Insurance Commissioner issued a second directive on December 2, 2008. There, “[t]he Commissioner observed that the Department ‘ha[d] never indicated that the diminished value result obtained by a carrier’s use of a particular formula or method constitutes the definitive determination of the carrier’s liability to its insured.’
The Commissioner noted that “[t]he nature of each claim demands that carriers must take into consideration all relevant information in the evaluation of diminished value claims including, but not limited to, relevant information provided by an insured regarding diminution of value.”
Bottom line is that they can and often do use the infamous 17(c) formula, but they really don’t have to.
4. What is the infamous 17(c)?
This formula uses some modifiers to come up with the final diminished value. It first takes 10% of the fair market value of your car. It then assigns a Damage modifier where it gives a value of 0-1 from no damage to severe damage to the vehicle’s structure. It then sets a mileage modifier with a blue of 1-0 (1.0 – 0.91 having a mileage of 0 – 9,999) and 0 (having a mileage of 100,000 plus). You would then multiply your base value by your damage modifier, and you’ll get a number. You would then take your mileage modifier and multiply it by the number you got by multiplying your damage modifier by your base value. And voilà!
As you can see, the entire thing is very made-up. There’s no scientific rule behind it.
5. What should be used instead?
It should definitely use an expert’s individual opinion instead of this made-up method. But what are your options when the insurance company refuses to play nice? You could bring a lawsuit and fight them. However, we recommend that you could put in your best argument when you are submitting your demand in the first place. This means let us help! This means that if your attorney can’t put up a persuasive argument on your behalf, perhaps they are doing something wrong! If you have any questions about your diminished value claim, don’t hesitate to call us and we’ll be happy to guide you through the process. After all, this is exactly what we do for every single one of our clients who have a personal injury claim.