What Is Diminished Value?

Once your vehicle is involved in a collision no matter the quality of repair there is a perception in the open market that your vehicle has lost value. There are several reasons for this loss:

1. 1. Consumer Perception (Your vehicle is now less desirable in the open market place.)
2. 2. Disqualification of being a Certified Pre-Owned Vehicle
3. 3. The potential liability to a dealer selling the vehicle in the open market.
4. 4. Loss of Warranty (Specifically to the damaged area.) (Body Shops warranty not transferrable to the next owner.)
5. 5. Aspects of the repair that is visible to the trained eye.
6. 6. Some aspects of the repair that is visible to the untrained eye.
7. 7. The inability in the collision industry to replicate a pre-collision repair.

The simplest way to help you understand diminished value?! You go to Honest Joe's Car World. You're looking for a 2008 Honda Accord EX fully loaded and red in color. Old Joe takes you out on the lot and says we have two of them on the lot. Joe begins to tell you that both the vehicles are red, they have the same options, the same miles and they are priced the same. But Joe is honest (as he should be) and tells you one of the vehicles has been wrecked and repaired. The estimate of repairs came to $5,000.00. Which one would you purchase? You will most likely purchase the vehicle that has never been involved in a wreck.

Since that vehicle is less desirable due to its damage history there is an obvious loss in its value.

CCSI offers detailed vehicle inspections and diminished value reports. Our diminished value reports range from 8 to 15 pages depending on what we find during the inspection process. We take 50 to 150 photos of your vehicle detailing your vehicles options and any flaws and defects. We do not do inspections for safety however, if we find any repair related issues that appear unsafe we will inform you of the issues and note them in the report.

Prices vary due to your specific needs and possible travel expense to your home or work so please call for an accurate quote.

The Georgia Insurance Commissioner has announced that “all insurers in this state must pay its auto policyholders diminished value”.

The automobile is probably the second largest investment most people will ever make once involved in an accident the value of your vehicle can drop substantially. There are many factors to consider in calculating the diminished value one would lose:

1. Inherent Diminished Value
2. Repair Related Diminished Value
3. Insurance Related Diminished

“Inherent Diminished Value” is based on public awareness that even if a vehicle is repaired to the best of human ability, it will still exhibit remaining deficiencies and inconsistencies from the pre-loss condition of the vehicle. These deficiencies include, but are not limited to;

• The ability to determine a vehicles damage history
• The loss of factory warranties
• The loss of a vehicles ability to become a certified pre-owned vehicle
• Weaker structural components that appear cosmetically sound
• Impossible to duplicate factory seams, sealers, and finishes
• Telltale signs of repair, such as paint missing off the heads of bolts
• The unavailability of some factory decals, and markings
• Undiscovered Kinetic damage throughout the vehicle
• The increased likelihood of a mechanical failure due to direct or Kinetic damage
• The effect that the repair will have on the future deployment of the SRS systems (Supplemental Restraint Systems)
• The impossibility of duplicating immersion rust-proofing techniques, etc.

“Repair Related Diminished Value” is based on remaining flaws and defects caused by improper repairs for which the shop had been asked, and paid, to complete. Poor repairs would cause the vehicle to be valued less than a properly repaired vehicle. A few examples of repair related flaws and defects are as follows;

• Poor structural, and cosmetic welds
• Frame repair listed on the insurance estimate, but not completed properly
• Inferior repairs on straightened panels
• Miss-matched color after “blending” had been paid
• Sanding scratches on moldings, glass, and trim

Keep in mind that even if there is “Repair Related Diminished value”, the insurer is still the only one contractually obligated to restore the vehicle to its pre-loss condition relevant to function, appearance, safety, and value, thus any “Repair Related” diminished value would still be the insurer’s responsibility. This area of coverage may fall under the “comprehensive”, or “Under Insured” sections of the insurance policy. If the insurer feels that they have sustained losses due to poor repairs, they have the duty to pay the remaining damages, and the right to subrogate those losses directly against the at fault shop. By following these correct and legal steps, the insurance industry would be sending a clear message to repairers that poor quality and fraud are unacceptable.

“Insurance Related Diminished Value” is based on remaining flaws, defects, and damage, which the insurer had neglected to address. When an insurer negotiates the settlement of an automobile damage claim, they will typically provide an estimate of repairs, which outlines all specific procedures, parts, and materials that they are willing to pay to the claimant or insured. This itemized listing of insurer authorized repairs will be generated by one of the following entities;

1. An “in-house” appraiser, who is hired as a full time employee of the insurer, then trained to assess collision damage in accordance with policy provisions
2. An “independent” appraiser who is hired as a subcontractor to assess the damage on behalf of the insurer, who also follows insurer guidelines
3. An employee of a “Direct Repair” body shop, who agrees to prepare the assessments using the guidelines established by the insurer in exchange for consumer referrals from the insurer
4. In some cases, the insurer will offer to pay based on the lowest of three estimates. This will cause the level of compensation to be based upon the estimator with the least experience, inspecting the vehicle for the shortest time, using the poorest repair techniques, and potentially overlooking the most damage

Under each of the above scenarios, the insurer is bound by law to the assessment and actions of the party the insurer hired to represent themselves. When the appraiser for the insurer (a, b, or c) prepares a damage assessments, or (d) where the insurer relies upon a third party, which overlooks, fails to specify, or refuses to address all repair procedures, parts, and materials required to restore the vehicle to its pre-loss condition, the insurer becomes responsible for “Insurance Related Diminished Value”. Since the insurer (and consumer) rely upon the skill and expertise of the insurer’s hired appraiser, it would be incumbent upon the insurer to select competent and skilled persons as appraisers so that by complete repair to pre-loss function, appearance, safety, and value, the insurer would have met their contractual obligations. Any failure to authorize all required procedures, parts, and materials to restore a vehicle to its pre-loss condition must be caused by one of the following;

1. Inexperience, lack of training, or incompetence on the part of the insurer’s selected appraiser
2. Company guidelines set to discourage or prohibit the authorization and payment of all required procedures, parts, and materials
3. Fraud on the part of the insurer by willful and intentional underpayment of all required procedures, parts and materials

When there is remaining flaws, defects, or damage on the vehicle, and repair procedures were not specifically listed on the itemized insurance authorized repairs, the result would be “Insurance Related Diminished Value”. Additionally, when the insurer specifies imitation parts, which are not EQUAL TO, OR BETTER THAN the Original Equipment Manufacturer parts, the insurer would also be responsible for the Diminished Value caused by the inferior parts they specified.

Without an expert inspection most of these factors could not be taken into consideration. The amount of damage to ones vehicle is specific and the method of repair is specific. Most formulas are based on the fact that the vehicle has been restored to pre-loss condition DV Level 1 (Click here to See The Seven Levels of Repair). You can easily see that DV Level 1 is a very high standard of repair.

The following Overview from Consumer Collision Services Inc. was sent to the Georgia Insurance Commissioners Office back in 1995 concerning the 17-C formula that most insurance companies are using today. This Overview will give you more insight and answer many of your questions.

(Click Here to View the Overview) (Open another page.)

Our appraisers can provide you with a comprehensive report including all aspects of diminished value. During the inspection our appraiser will note and point out any safety related issues. In some cases we will notify the parties involved of their potential liability for un-safe repairs.

In fact 80% of the vehicles we have inspected have received a repair lower than DV Level 3 (Industry Standard).

Here are some of the flaws and defects that can attribute to your diminished value claim:

Un-repaired Structural Damage	Un-Refinished Paint Work
Structurally Poor Welds	Pinch Weld Damage

These flaws and defects attribute to your diminished value claim and may entitle you to receive a re-repair. Most consumers that receive substandard repairs are not even aware of them until pointed out by our inspections.

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