2 Words That Can Lead to Thousands of Dollars After an Accident...Diminished Value
CBS news network Channel 13 show "Call Kurtis" investigates the money you could get back from an accident through diminished value and the "best kept industry secret".
SACRAMENTO (CBS13) — Liz Teklinsky bought a brand new Hyundai Elantra. It’s her first new car in 19 years. “It had the new-car smell. It had the technology and heated seats,” she said.
A week later with fewer than 500 miles on the odometer, someone crashed into her car. The other driver’s insurance company paid for the damage, but Liz now realized if she tried to sell her car, she wouldn’t get as much for it.
Car appraiser Seth Stairs of Ready2Appraise.com says even after repairing the damage, a car’s value may drop after a crash. Someone will be less willing to buy your car than one never involved in an accident. He calls the difference “diminished value” and says you shouldn’t expect insurance companies to tell you about it.
“This is the industry kept secret,” Stairs said.
INDUSTRY KEPT SECRET
He says insurance companies are keeping billions of dollars nationally they should be paying out. He says your policy with your own insurance company most likely won’t pay diminished value on your car. If the other driver is at fault, he says you should ask their insurance for the diminished value.
He says newer cars with structural damage usually have the biggest drop in value after a crash, while it may not affect the value of older cars at all.
Liz had never heard of diminished value before a friend told her about it. “I mean the concept made sense as soon as I heard it,” she said.
HOW MUCH LESS IS IT WORTH?
You may need to hire an appraiser which can cost you $350. Liz hired Ready2Appraise.com and Mr. Stairs said her car had lost $2,513 in value. When the other driver’s insurance countered with one thousand dollars, she declined and took the case to small claims court where she was awarded just shy of $3,000 including money to cover the appraisal cost and court fees.
LEGALLY, DO THEY HAVE TO PAY IT?
The Insurance Information Institute says, “Insurers pay to repair a car to the standard it was prior to the crash.” It says insurers “adjust claims to the letter of the law.”
Mr. Stairs was quick to point out that there was a big difference between the condition vs. the value after the crash. Cars can be restored to pre-accident condition, but not to pre-accident value.
Georgia and Washington state have clear laws about the diminished value consumers are owed. California does not.
The Department of Insurance says California insurance code is silent on the issue of diminished value after a car crash and the agency can’t go after an insurance company for refusing to pay it.
“Because our authority doesn’t extend that far and the law doesn’t require them to do so,” said Nancy Kincaid with the Department of Insurance.
Stairs claims the most he’s helped someone get is $9,000, citing the limits of Small Claims courts in California. Even he admits however, some judges don’t buy into diminished value. “A small minority of judges seems to have their own opinion of the law”, Stairs states, “even when the law is clearly on our side.”
“If you don’t ask you won’t get it,” he said. “If you have a high value vehicle with serious damage, be prepared to go to court!”
Liz is glad she did. With her diminished value check in the bank, it softens the blow of having her new car smashed up just one week after buying it.