Dimished Value is covered under the liability coverages… so therefore no one should be worried about accidents you don’t have any control over. The coverages in question were collision coverage. At least this is how it works in Texas, anyway.
All consumers of automobile insurance should breath a sigh of relief. Premiusms could have gone through the already high roof had this or other diminshed value cases prevailed.
– I do not know how the suit was pled, however the fact that the insured is not placed in pre-loss condition, tells me that the basic indemnity principal has been defeated; unless diminsihed value has been specifically excluded.
– This is a real component of damage that if not rated for, should be.
Curt wait until you take a $2,000 bath from a car dealer because the accident you could not avoid damaged your vehicle and then look up the definition of indemnity and see how you feel …
Hooray for Allstate! It is about time some sense was adjudicated in our courts. I, for one, would never take part in a class action lawsuit. The lawyers win millions while each class member gets a $0.16 check or a redeemable certificate toward a product of the loosing company. I hate to think what a victory would have done to auto rates.
I learned that indemnity has more to do with not profiting from a loss and not restoring the insured to the same financial position as before the loss. It is not always possible to restore an insured to the same financial position as pre-loss because policy limits are often inadequate.
Read the promise made with regards to collision and other than collision coverage. I believe you will find no promise made for paying of diminished value. The cost to repair or replace or Actual Cash Value, whichever is less.
To place a dollar amount on diminished value is an inexact science. If the suit had not been defeated, how would each class-action plaintiff state their claim?
– I agree with the unjust enrichment on any claim adjustment, where betterment was not rated for, like replacement cost value or “RCV.”
– The founding principle on which all property insurance was based upon is the concept of indemnity; thus like, kind, and quality (“LKQ”), repair, replacement and actual cash value (ACV) are all components to establish the nature and amount of the economic damage incurred by the insured.
– When the insured is not placed in this position, by defeating the real diminished value of the repaired vehicle, then part of the loss has been improperly avoided by the carrier.
– As one of the settlement options, consider the concept of replacement with a “LKQ” car or “ACV” of the car, then there is no issue, as the insured is made whole pursuant to the concept of indemnity.
– It is only when repair is involved that the insured is currently being forced (by whichever is less) to accept a partial payment for their loss.
– I am in agreement with the class action approach, as the lawyers are the only one’s who really gain and I would not join a class action either … I suspect they were greedy and did not do their homework … unfortunate as the case law would have value in places other than Georgia.
– Check back after you get screwed out of a few thousand dollars on an accident where the at fault party is judgement proof and uninsured.
– What are you willing to pay for a previosuly damaged car or better yet what if you bought one and it was not disclosed ?
– The value is established by expert opinion in the marketplace and the same place you find out about it when you trade in your car … it is not rocket science.
– In fact a component of “ACV” is the value of a product in the marketplace after defineable use like miles or hours on an engine … these same people and the marketplace establish that very real loss of value.
No, it’s not rated for and shouldn’t be. Diminished value is speculative. If I get my car back repaired and continue to drive it to the point where there is negligable difference in trade in value, why should I collect diminished value. I certainly don’t want to pay higher rates for this contingency.
A better avenue would be to offer optional coverage for diminished value and let people who want it pay for it.
As far as indemnity, most drivers out there don’t have enough liability insurance, and I don’t have enough UM coverage, to fully compensate my family if I’m killed in a car wreck. There are numerous other scenarios where innocent parties are not fully compensated. The system does the best it can, but the principal of indemnity is just that, a principal that cannot be fully realized in every scenario.
Whether “diminished value” is truly an element of auto repairs or not really isn’t the point here. Only one other state has read this coverage into the contract, so it’s hard to say this is a burgeoning legal issue. Instead, what is the contract language? What do the state legislatures require? Shouldn’t this be a matter for individual state insurance departments to deal with? If this coverage is indeed found to be part of the contract, aren’t insurers entitled to rate and collect premium for the additional exposure BEFORE being forced to pay claims? Are class actions truly an efficient way for the marketplace to work? It’s probably much more effective to either lobby for legislation or encourage the marketplace to offer such coverage at an appropriate price.
I detest class action suits where only the attorneys profit. However I am in full agreement that an option, for a charge, should be offered for diminished value.
We keep a vehicle usually 3-4 years and trade off. We always buy and trade the same model and make of vehicle, so we are pretty good at estimating our trade-in value. Our currently vehicle was hit, while parked, and damaged when about 1 year old. Imagine our dismay when we went to trade this one in. They knew it was in an accident and the trade-in value was much less than what we had experienced in the past.
Diminished Value is another invention along with Pain & Suffering. It’s time jury stop rewarding on the bases of Deep Pockets and look at the FACTS and it’s appartent they looked at the FACTS, in this CASE. Thank jurors.
My first thought after reading this article is that isn’t it the insurance companies responsbility to indemnify. Well, if your veh is worth less after repairs due to diminished value, then they have not indemnified you.
The first question I have when someone makes a claim for “diminished value” is: Is there an actual change in value of the vehile? The customary response is that the trade-in dealer indicates that he has to reduce the trade-in value, due to the fact that the vehicle was involved in an accident, eventhough the vehicle’s body panels were fully replaced and repainted. I suspect that if that same person was going to repurchase his vehicle from the dealer the week after he traded it in, he will see that vehicle on the lot listed for the same price as other similar model vehicles with the same mileage, without a discount for the fact that it was previously involved in an accident.
Secondly, I would say that “diminished value” can only be measured at the time the repaired vehicle is actually sold by the owner. If a carrier pays diminished value today to the owner, but the owner does not actually sell the vehicle until 7 years from now, the owner actually profits, because who cares that a vehicle was struck 7 yrs. ago (law of diminishing returns or accelerated depreciation).
With years in the auto repair industry and insurance industry(25yrs autobody repairman and 8yrs Allstate agent}, experience taught me that the repairs to a vehicle, if done properly with OEM parts and the amount of damages is a small percentage of the vehicles value, the vehicles value will not depreciate much at all. The use of pro shops by insurers is the only reason that I would agree with diminished values. Most of their pro shops do not do excellent work. One must also include that the vehicle operator bears a certain amount of resposibilty for negligence. Diminished value does not pertain to liabilty losses, only collision losses. Once upon a time I believed that claim losses were what caused rate increases, butttt, now I fully believe that premiums are a product of investor greed(Stock holder Dividends).
One opinion, from an ex autobody man and ex Allstate agent.. OMP
The purpose of class actions is to allow the little man to have a voice where they normally wouldn’t. An individual simply can’t take on the industry practices issue with a simple DV claim. It’s not cost effective as expenses to bring such a case are a hundred fold more expensive as the damages.
Class actions make it possible for the public to force corporations to change their practices where they can’t individually. I understand you focusing on the short term gain of the lawyers but you are forgetting the long term benefits consumers reap from the work the attorneys do. Don’t get caught up in the tort reform hype on class actions!
Allgood v. Meridian Sec. Ins. Co., (Ind.App.)
May 5, 2004: Automobile – Policy covered diminished value of repaired vehicle.–Policy Interpretation.
Diminution in the value of a repaired automobile was within coverage for damage to an auto. The limit of liability provision allowing the insurer to repair or replace with like kind and quality was ambiguous as it could reasonably mean restoration to similar condition in appearance and function or similar appearance, function, and value. The insurer’s obligation to repair or replace a damaged vehicle with like kind and quality included restoring to the insured a similar value as prior to the damage.
Indemnity: Legal principle that specifies an insured should not collect more than the actual cash value of a loss but should be restored to approximately the same financial position as existed before the loss.
An insurer’s policy definition will supercede all other definitions of indemnity. However in my opinion, this is still vague and inexact.
Food for thought: I agree with the folks who state there would be unjust enrichment say, 5 to 10 years down the road. However, in those cases where cars are sold/traded sooner, say in 2 to 3 years, there IS a problem. Our very industry contributes repair stats to databases which “mark” a given vehicle as having been repaired. Just put a VIN number into one of the fee-based internet search services and you’ll see what I mean if a claim was paid on that VIN. Savvy consumers and dealers use these services and would become aware of accident history!! This issue is far from over.
How do you think you’ll feel when you’re the driver of the brand new car that gets nearly totalled in a collision that is not your fault but the good insurance company, rather than paying to replace it – which is what they should do, decides instead to pay for the “repairs” (which by the way can be up to 70% of the value of your new car) because it’s cheaper for them that way. No matter about your safety or the soundness of the repairs. Needless to say, after said repairs have been made, your brand new car is no longer new and now sqeaks, shakes and rattles, among other things, and you are forced to try and resolve this through the body shop (which could care less because they’ve already gotten their $13,000, $15,000, $17,000+ – it’s not their problem anymore – it’s your problem – you’ve just been screwed! And guess what? You can’t even sue the insurnace company anymore for the diminished value of your new car, which now of course, is not worth crap. And on top of that, you’ve got permanent neck and back problems. I don’t think you’d feel like you were fully compensated then. And I don’t think you’d give a **** about the premiums either. They’re already through the roof. And it’s not because of legitimate claims made by people trying to recoup their legitimate losses. It’s becuase of the greedy insurance companies who have been and will continue to screw over the little people like you and me. Now it’s just been made a little easier for them.
Some jurisdictions do recognize diminished value as legitimate part of damages in a liability claim. Iowa is such a state.
To me the great inequity occurs when a claimant collects diminished value & then drives the car for several years or until it has so many miles that the prior damage has no impact on the vehicle’s market value – that is where the system gets screwed & the claimant gains a wind-fall profit at the expense of the insurance industry & ultimately, the premium paying consumer.
Wait until you have a brand new vehicle legally parked and someone isn’t watching the road and rear ends your vehicle pushing it 15ft. Then look at over $11 grand in auto repairs on your brand new vehicle with a bent frame and a trade-in value from all 3 local dealers at $0.50 cents on the dollar so they can turn around and send it to auction. Pray this doesn’t happen to you or you’d wish you had re-thought your opinion on inherent diminished value! Not to mention that now your vehicle is clearly not back to the pre-loss value. Regardless of trade-in or resale. Go to auto-web or any of the other vehicle sites – Do you think you would pay the same for a vehicle that had over $11k in damages vs one that was never hit.
– RTS … does not get it, he/she is too woried about someone getting away with something they are currently or ever suspect they will get.
– Fact is that if an owner decides to drive, the now beat up, rattling car they are doing so with a real loss of quality and safety, as matter of choice ( a form of sweat equity), that is no windfall. If you are like the other parties forced to do so by the defeat of indemnity (failure to place you in pre-loss condition) you are not compensated and in equity this is a failure of the system. The ignorant consumed only with their own unenlightened self-interest will come around when they are forced to walk in the shoes of another.
– Logic and equity are the key and the higher rate issue is a red herring by the ill informed.
tcf finally go the point- diminished value has never been a part of the Comp or Coll coverage. Why not have the states have an optional endorsement for it- those who wish to pay for it have the coverage. Don’t saddle the rest of us with the expense of a few.
Liability claim- you should be entitled to it.
Endorsements were developed for leasing companies for GAP, for an additional premium. Life is a risk and insurance does not cover everything.
If the suit was won, how much would the attorneys received? Last one I was involved in, I had a $2.50 refund in premium with the $millons going to the law firms- if you claim an insurance company is greedy- its an attorneys picture by the definition in the dictionary! jhb
RAC-
Dimished Value is covered under the liability coverages… so therefore no one should be worried about accidents you don’t have any control over. The coverages in question were collision coverage. At least this is how it works in Texas, anyway.
Which states were included in the case?
How will this impact Guaranteed Auto Protection (GAP) programs in the short term? Will we see a spike in fees and a reduction in coverage options?
Please respond.
All consumers of automobile insurance should breath a sigh of relief. Premiusms could have gone through the already high roof had this or other diminshed value cases prevailed.
– I do not know how the suit was pled, however the fact that the insured is not placed in pre-loss condition, tells me that the basic indemnity principal has been defeated; unless diminsihed value has been specifically excluded.
– This is a real component of damage that if not rated for, should be.
Curt wait until you take a $2,000 bath from a car dealer because the accident you could not avoid damaged your vehicle and then look up the definition of indemnity and see how you feel …
Hooray for Allstate! It is about time some sense was adjudicated in our courts. I, for one, would never take part in a class action lawsuit. The lawyers win millions while each class member gets a $0.16 check or a redeemable certificate toward a product of the loosing company. I hate to think what a victory would have done to auto rates.
I learned that indemnity has more to do with not profiting from a loss and not restoring the insured to the same financial position as before the loss. It is not always possible to restore an insured to the same financial position as pre-loss because policy limits are often inadequate.
Read the promise made with regards to collision and other than collision coverage. I believe you will find no promise made for paying of diminished value. The cost to repair or replace or Actual Cash Value, whichever is less.
Just my thoughts…
To place a dollar amount on diminished value is an inexact science. If the suit had not been defeated, how would each class-action plaintiff state their claim?
– I agree with the unjust enrichment on any claim adjustment, where betterment was not rated for, like replacement cost value or “RCV.”
– The founding principle on which all property insurance was based upon is the concept of indemnity; thus like, kind, and quality (“LKQ”), repair, replacement and actual cash value (ACV) are all components to establish the nature and amount of the economic damage incurred by the insured.
– When the insured is not placed in this position, by defeating the real diminished value of the repaired vehicle, then part of the loss has been improperly avoided by the carrier.
– As one of the settlement options, consider the concept of replacement with a “LKQ” car or “ACV” of the car, then there is no issue, as the insured is made whole pursuant to the concept of indemnity.
– It is only when repair is involved that the insured is currently being forced (by whichever is less) to accept a partial payment for their loss.
– I am in agreement with the class action approach, as the lawyers are the only one’s who really gain and I would not join a class action either … I suspect they were greedy and did not do their homework … unfortunate as the case law would have value in places other than Georgia.
– Check back after you get screwed out of a few thousand dollars on an accident where the at fault party is judgement proof and uninsured.
EJ:
– What are you willing to pay for a previosuly damaged car or better yet what if you bought one and it was not disclosed ?
– The value is established by expert opinion in the marketplace and the same place you find out about it when you trade in your car … it is not rocket science.
– In fact a component of “ACV” is the value of a product in the marketplace after defineable use like miles or hours on an engine … these same people and the marketplace establish that very real loss of value.
No, it’s not rated for and shouldn’t be. Diminished value is speculative. If I get my car back repaired and continue to drive it to the point where there is negligable difference in trade in value, why should I collect diminished value. I certainly don’t want to pay higher rates for this contingency.
A better avenue would be to offer optional coverage for diminished value and let people who want it pay for it.
As far as indemnity, most drivers out there don’t have enough liability insurance, and I don’t have enough UM coverage, to fully compensate my family if I’m killed in a car wreck. There are numerous other scenarios where innocent parties are not fully compensated. The system does the best it can, but the principal of indemnity is just that, a principal that cannot be fully realized in every scenario.
Whether “diminished value” is truly an element of auto repairs or not really isn’t the point here. Only one other state has read this coverage into the contract, so it’s hard to say this is a burgeoning legal issue. Instead, what is the contract language? What do the state legislatures require? Shouldn’t this be a matter for individual state insurance departments to deal with? If this coverage is indeed found to be part of the contract, aren’t insurers entitled to rate and collect premium for the additional exposure BEFORE being forced to pay claims? Are class actions truly an efficient way for the marketplace to work? It’s probably much more effective to either lobby for legislation or encourage the marketplace to offer such coverage at an appropriate price.
I detest class action suits where only the attorneys profit. However I am in full agreement that an option, for a charge, should be offered for diminished value.
We keep a vehicle usually 3-4 years and trade off. We always buy and trade the same model and make of vehicle, so we are pretty good at estimating our trade-in value. Our currently vehicle was hit, while parked, and damaged when about 1 year old. Imagine our dismay when we went to trade this one in. They knew it was in an accident and the trade-in value was much less than what we had experienced in the past.
Guess we will keep this one for a few years…….
Diminished Value is another invention along with Pain & Suffering. It’s time jury stop rewarding on the bases of Deep Pockets and look at the FACTS and it’s appartent they looked at the FACTS, in this CASE. Thank jurors.
My first thought after reading this article is that isn’t it the insurance companies responsbility to indemnify. Well, if your veh is worth less after repairs due to diminished value, then they have not indemnified you.
well, i guess the plaintiff attorneys suffered diminished value. atta boy Allstate!
The first question I have when someone makes a claim for “diminished value” is: Is there an actual change in value of the vehile? The customary response is that the trade-in dealer indicates that he has to reduce the trade-in value, due to the fact that the vehicle was involved in an accident, eventhough the vehicle’s body panels were fully replaced and repainted. I suspect that if that same person was going to repurchase his vehicle from the dealer the week after he traded it in, he will see that vehicle on the lot listed for the same price as other similar model vehicles with the same mileage, without a discount for the fact that it was previously involved in an accident.
Secondly, I would say that “diminished value” can only be measured at the time the repaired vehicle is actually sold by the owner. If a carrier pays diminished value today to the owner, but the owner does not actually sell the vehicle until 7 years from now, the owner actually profits, because who cares that a vehicle was struck 7 yrs. ago (law of diminishing returns or accelerated depreciation).
With years in the auto repair industry and insurance industry(25yrs autobody repairman and 8yrs Allstate agent}, experience taught me that the repairs to a vehicle, if done properly with OEM parts and the amount of damages is a small percentage of the vehicles value, the vehicles value will not depreciate much at all. The use of pro shops by insurers is the only reason that I would agree with diminished values. Most of their pro shops do not do excellent work. One must also include that the vehicle operator bears a certain amount of resposibilty for negligence. Diminished value does not pertain to liabilty losses, only collision losses. Once upon a time I believed that claim losses were what caused rate increases, butttt, now I fully believe that premiums are a product of investor greed(Stock holder Dividends).
One opinion, from an ex autobody man and ex Allstate agent.. OMP
The purpose of class actions is to allow the little man to have a voice where they normally wouldn’t. An individual simply can’t take on the industry practices issue with a simple DV claim. It’s not cost effective as expenses to bring such a case are a hundred fold more expensive as the damages.
Class actions make it possible for the public to force corporations to change their practices where they can’t individually. I understand you focusing on the short term gain of the lawyers but you are forgetting the long term benefits consumers reap from the work the attorneys do. Don’t get caught up in the tort reform hype on class actions!
RFW
Here is a recent case in California.
Allgood v. Meridian Sec. Ins. Co., (Ind.App.)
May 5, 2004: Automobile – Policy covered diminished value of repaired vehicle.–Policy Interpretation.
Diminution in the value of a repaired automobile was within coverage for damage to an auto. The limit of liability provision allowing the insurer to repair or replace with like kind and quality was ambiguous as it could reasonably mean restoration to similar condition in appearance and function or similar appearance, function, and value. The insurer’s obligation to repair or replace a damaged vehicle with like kind and quality included restoring to the insured a similar value as prior to the damage.
One definition of indemnity states:
Indemnity: Legal principle that specifies an insured should not collect more than the actual cash value of a loss but should be restored to approximately the same financial position as existed before the loss.
An insurer’s policy definition will supercede all other definitions of indemnity. However in my opinion, this is still vague and inexact.
Food for thought: I agree with the folks who state there would be unjust enrichment say, 5 to 10 years down the road. However, in those cases where cars are sold/traded sooner, say in 2 to 3 years, there IS a problem. Our very industry contributes repair stats to databases which “mark” a given vehicle as having been repaired. Just put a VIN number into one of the fee-based internet search services and you’ll see what I mean if a claim was paid on that VIN. Savvy consumers and dealers use these services and would become aware of accident history!! This issue is far from over.
Hey BL,
How do you think you’ll feel when you’re the driver of the brand new car that gets nearly totalled in a collision that is not your fault but the good insurance company, rather than paying to replace it – which is what they should do, decides instead to pay for the “repairs” (which by the way can be up to 70% of the value of your new car) because it’s cheaper for them that way. No matter about your safety or the soundness of the repairs. Needless to say, after said repairs have been made, your brand new car is no longer new and now sqeaks, shakes and rattles, among other things, and you are forced to try and resolve this through the body shop (which could care less because they’ve already gotten their $13,000, $15,000, $17,000+ – it’s not their problem anymore – it’s your problem – you’ve just been screwed! And guess what? You can’t even sue the insurnace company anymore for the diminished value of your new car, which now of course, is not worth crap. And on top of that, you’ve got permanent neck and back problems. I don’t think you’d feel like you were fully compensated then. And I don’t think you’d give a **** about the premiums either. They’re already through the roof. And it’s not because of legitimate claims made by people trying to recoup their legitimate losses. It’s becuase of the greedy insurance companies who have been and will continue to screw over the little people like you and me. Now it’s just been made a little easier for them.
Sorry, BL, my first post was meant for Curt.
Some jurisdictions do recognize diminished value as legitimate part of damages in a liability claim. Iowa is such a state.
To me the great inequity occurs when a claimant collects diminished value & then drives the car for several years or until it has so many miles that the prior damage has no impact on the vehicle’s market value – that is where the system gets screwed & the claimant gains a wind-fall profit at the expense of the insurance industry & ultimately, the premium paying consumer.
Wait until you have a brand new vehicle legally parked and someone isn’t watching the road and rear ends your vehicle pushing it 15ft. Then look at over $11 grand in auto repairs on your brand new vehicle with a bent frame and a trade-in value from all 3 local dealers at $0.50 cents on the dollar so they can turn around and send it to auction. Pray this doesn’t happen to you or you’d wish you had re-thought your opinion on inherent diminished value! Not to mention that now your vehicle is clearly not back to the pre-loss value. Regardless of trade-in or resale. Go to auto-web or any of the other vehicle sites – Do you think you would pay the same for a vehicle that had over $11k in damages vs one that was never hit.
– RTS … does not get it, he/she is too woried about someone getting away with something they are currently or ever suspect they will get.
– Fact is that if an owner decides to drive, the now beat up, rattling car they are doing so with a real loss of quality and safety, as matter of choice ( a form of sweat equity), that is no windfall. If you are like the other parties forced to do so by the defeat of indemnity (failure to place you in pre-loss condition) you are not compensated and in equity this is a failure of the system. The ignorant consumed only with their own unenlightened self-interest will come around when they are forced to walk in the shoes of another.
– Logic and equity are the key and the higher rate issue is a red herring by the ill informed.
End…
tcf finally go the point- diminished value has never been a part of the Comp or Coll coverage. Why not have the states have an optional endorsement for it- those who wish to pay for it have the coverage. Don’t saddle the rest of us with the expense of a few.
Liability claim- you should be entitled to it.
Endorsements were developed for leasing companies for GAP, for an additional premium. Life is a risk and insurance does not cover everything.
If the suit was won, how much would the attorneys received? Last one I was involved in, I had a $2.50 refund in premium with the $millons going to the law firms- if you claim an insurance company is greedy- its an attorneys picture by the definition in the dictionary! jhb