If a police report or car insurance claim is filed after a crash, the crash gets logged into “Carfax.” If a car is damaged and repaired from an accident, it loses value.
This loss of value is called diminished value (“DV”). A car owner will not be able to get full value for the car.
The car’s history can be seen by others on vehicle reporting companies such as Carfax. Car dealerships are slow to buy a car that has been in prior accidents and will offer less money.
Diminished value is different than:
- The cost of fixing your car, and
- The cost of a rental car
I use the word “car” in this article, however diminished value applies to all vehicles including trucks, motorcycles, scooters and more.
Does your car insurance company have to pay you for the diminished value of your car?
No. Your own car insurance company never has to pay you for the loss in value of your vehicle because it was in a crash. This is because your car insurance is based on a contract.
Even if someone else caused your collision, your own auto insurer doesn’t have to pay for the diminished value of your car.
If you have collision coverage on your auto insurance policy, your insurer will pay to get your car fixed. But, they won’t pay for the diminished value.
Does a careless driver have to pay you for diminished value?
Generally, speaking yes. In Florida, if someone’s negligence caused damage to your car, that driver has to pay you for the diminished value of your car.
(They also have to pay you for the cost of fixing your car, and the cost a rental car, but these are outside the scope of this article.)
Does a careless driver’s auto insurer have to pay you for diminished value?
At least one insurance company, Infinity Insurance Company, will argue No. They will point to the case of Copelan v. Infinity Ins. Co. (United States District Court for the Central District of California June 14, 2016, Decided; June 14, 2016, Filed CASE NO. CV 16-1355-R).
Copelan is not a Florida case. The court agreed with Infinity and said that the claimant couldn’t point to anywhere in the careless driver’s contract with Infinity or Liberty Mutual that provides entitlement to diminished value.
The Ninth Circuit Court of Appeals has specifically held that the insertion of the word “physical” into the definition of “property damage” eliminated any possibility that intangible economic losses could constitute “property damage.” N.H. Ins. Co. v. Vieira, 930 F.2d 696, 698-99 (9th Cir. 1991) (“[W]e are persuaded that diminution in value is not ‘physical damage’ to ‘tangible property'”); Goodstein v. Cont’l Cas. Co., 509 F.3d 1042, 1054 (9th Cir. 2007) (“Diminution in value does not alone constitute ‘property damage’ where the policy language requires ‘physical injury to tangible property'”).
In Florida, if someone’s negligence caused damage to your car, that driver’s insurance company may have to pay you for the diminished value of your car.
(Their auto insurer also has to pay you for the cost of fixing your car, and the cost a rental car, but these are outside the scope of this article.)
However, the careless driver’s insurer doesn’t have to pay you more than the driver’s property damage (PD) liability coverage limits.
In Florida, every car has to carry at least $10,000 in property damage liability insurance.
John is driving his car in Miami. Sandra is driving another car.
She isn’t paying attention. She rear ends John.
It costs $10,000 to fix John’s car. John’s car also loses $2,000 in value because it has now been in a wreck.
GEICO insures Sandra with $10,000 in PD liability coverage.
GEICO only has to pay John $10,000. GEICO doesn’t have to pay for the $2,000 loss of John’s car value.
This is because Sandra only carried $10,000 in PD liability insurance. GEICO exhausted the policy limits by paying the $10,000 for John’s property damage.
When is a car insurance company likely to deny your DV claim?
The careless driver’s insurer is much more likely to deny your DV claim if you’re vehicle:
- Is five or more years old; or
- Has 100,000 or more miles; or
- Has a prior accident history regardless of whether the crash history was published in a vehicle history report.
What happens if you’re partially at fault for the crash?
If you’re partially responsible for causing the accident, then your diminished value claim will be reduced by your share of fault.
Take the above example that I used with GEICO. If the accident was a T-bone crash, and Sandra was 50% at fault, then GEICO would pay 50% of John’s diminished value claim.
In Florida, you can still get paid for diminished value even if you’re 51% or more at fault for the collision. However, your diminished value claim is reduced by your percentage of fault.
So if you’re 70% at fault, you are entitled to recover 30% of the diminished value of your car.
How do you know how much value your car has lost?
The cheapest way to find out your car’s diminished value is to get a vehicle loss of market value assessment report. You can get a report online for about $50.00.
It is well worth it.
How do you get the careless driver’s auto insurer to pay for your car’s lost value?
There are a few steps that you should take to get the careless driver’s insurance company to pay for your car’s diminished value.
Send them a letter
You should send the careless driver’s auto insurer a letter that tells them that you are making a claim for your car’s lost value. Give them a time within which they must pay your claim.
Send them the case law
Your letter should include a copy of the Florida case that says that you can recover for your car’s lost value. That case is Airtech Service, Inc. v. MacDonald Construction Company, 150 So. 2d 465 – Fla: Dist. Court of Appeals, 3rd Dist. 1963.
Note that the Airtech case didn’t involve a car accident. It involved damage to an airplane, but the concept is the same. This is because in both cases the claim is against a tortfeasor.
Send them the vehicle loss of market value assessment report.
Will the at fault driver’s auto insurer refuse to pay your diminished value claim?
They are likely to, at least initially, fight you on your diminished value claim. However, once you send them a letter that includes Florida’s law and a diminished value assessment report, they may think twice.
Recently, I heard of at least one auto insurer saying that their insurance policy (contract) doesn’t require them to pay a diminished value claim made against their insured.
I think that they are wrong. There isn’t a Florida case that discusses that policy language.
Which auto insurers are likely to put up the biggest fight for your diminished value claim?
I would imagine that the nonstandard auto insurers are likely to fight these claims the hardest. The most common nonstandard auto insurers in Florida are United Auto Insurance Company, Imperial Fire & Casualty (RAC), Windhaven Insurance, Ocean Harbor and Kingsway Amigo.
I believe that the larger auto insurance companies are more likely to pay diminished value claims. However, they may still put up a fight.
By larger auto insurers, I am referring to:
- State Farm
- United States Automobile Association (USAA)
- Travelers Home and Marine Insurance Company
- Safeco Insurance Company of Illinois (A Liberty Mutual Company)
- 21st Century Centennial Insurance Company (part of the Farmers Insurance Group of Companies)
- Infinity Insurance Company
- Nationwide Insurance Company
What to do if they still won’t pay your loss of value claim
Sometimes a careless driver’s auto insurer may not pay your diminution of value claim even after you’ve provided all possible documentation.
If so, you have a few options, which are:
- Speak with a supervisor.
- Submit a request for insurance assistance (consumer complaint).
- File a civil remedy notice of insurer violation (and send it to the insurer).
- Sue. (You will likely need an attorney to sue for you.)
I only handle diminished value claims IF YOU’RE ALSO HURT
I am a Miami car accident lawyer that can represent you if you were hurt anywhere in Florida. I only handle diminished value claims if you were also hurt in an accident that someone else caused in Florida.
If you were not hurt in Florida, but want to make a diminished value claim, I am not able to help.
Call Me Now!
Call me now at (888) 594-3577 to find out for FREE if we can represent you. We answer calls 24 hours a day, 7 days a week, 365 days a year.