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Good laugh- Diminished value...

1703 Views 6 Replies 5 Participants Last post by  ssstealth
So, I got a check yesterday from Snake Farm (my neighbor's insurance company) for $486.00. I called them and asked what it was for. He said it was for diminshed value. I had a feeling that they were going to do this. He goes on about the "formula" which I know is not the law, but what they try to use to "diminish" their liability. I said "you're telling me that a $77,000 limited production car in perfect shape with 12,000 miles sustains $4,500 in damage requiring replacement of a quarterpanel and bumper has only lost $486 in value?" So he says, "no, I'm not telling you that, but that's the formula we use." He tells me to go get some information and he'll look at it. Great, now I have to waste my time on this! I have e-mailed one of those diminished value consultants to get some info, but the problem is that there are so few of our cars, the only sale number I'll be able to get is likely one without repaired damage. Any ideas or thoughts on what the diminshed value should be or where to get more info?
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Is he saying diminished value is 10% approx of the repair value? :bigroll:
The formula is a bit more complicated than that, but in a sense , yes. Here's the actual formula and explanation:


ACV - For purposes of our calculations, we will use the NADA retail value, including additions and subtractions for options and mileage. The NADA edition applicable at the time of loss of value claim is presented should be used.

BASE LOV - As is the case in most loss of value formulas, we will use 10% of the ACV as a starting point in our formula.

DAMAGE SEVERITY MODIFIER - This is the subjective decision which must be made by the adjuster. The nature and extent of damages should be based on the actual physical damage sustained by the vehicle, without using the cost to repair as a basis. The modifier can be from 0.0 to 1.0 with 1.0 reflective of extensive damages. It should be stressed that in some minor accidents the 0.0 modifier is appropriate as no loss of value would have been sustained. A basic guide for the damage severity modifier is as follows:


1.0 Severe damage to the structure of vehicle.
0.75 Major damage to structure and panels.
0.50 Moderate damage to structure and panels.
0.25 Minor damage to structure of vehicles.
0.0 No structural damage and replaced panels.

As this is subjective decision, the modifier can be adjusted as necessary to fit the damages. (EXAMPLE 1 - No frame damage, a replaced bumper and repaired body panel may call for a modifier of 0.1.
EXAMPLE 2 - Heavy frame damage to the front with moderate additional damage to the rear may call for a modifier of 0.85.)

MILEAGE MODIFIER - Generally, when a vehicle reaches 100,000 miles, it no longer has a realistic market value. There may be some cases where that is not so, but for most cars this figure should be accurate. The modifier is a factor of the actual mileage of the vehicle and the mileage where the vehicle no longer would be considered for retail resale by a dealer. The modifier can be from 0.0 to 1.0 reflective of zero miles. A basic guide for the mileage modifier (based on 100,000 mile limit) is as follows:


0 1.0
20,000 0.8
40,000 0.6
60,000 0.4
80,000 0.2
100,000 0.0

The modifier should be adjusted to reflect the actual mileage based on the following:


10% of ACV x Damage Modifier x Mileage Modifier = Loss of value

So, all that said, even if the car was worth $50,000, you take 10% of that or $5,000 multiplied by the damage modifier (which at most favorble to them say it is .25) multiplied by the mileage midifier of 1.0 and you still get $1,250! The question is where in the damage modifier is a quarterpanel and bumper? And that's if you use THEIR formula which does not accurately represent the real diminished value. I can see this is going to be some real fun. They didn't even offer what their own formula would say is fair at the lowest classification of damage!
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I had a pitt bull tear into my Honda S2000 (not as limited as the V but it was hand asselmbled and limited for an import) I had to replace both front fenders, bumper cover, and repaint the car from the doors forward. $4,000 worth of repairs. I ran into the same "diminished value" problem. I think they gave me tha same formula and pretty close to the same offer of $500. My arguement was that if anyone looked for replacement panels it would look like the whole front end had been in a wreck. I got the same response, "go find better data on how much I owuld really loose on trade or resale and they would consider it. BS in my opinion.
So I contacted one of these companies that does non-biased appraisals for diminished value. They said that based on the repair (quarter panel replacement and bumper) that the diminished value os $2200-$2600. To me, if I was looking to buy an STS-V and I saw 2 identical cars, one that was hit and and repaired and one that was never damaged...... for $2500+/-, it would be a no brainer, I would buy the one that was not hit. It seems to me that the real diminshed value number would be te number where it would be a coin toss which one you would buy. $2200-$2600 does not seem like the right number. Anyone have any thoughts on this?
Yes, but the rules of this site prevent me from sharing them.

It is always a laugh.

Several years ago I had a 1966 Coupe DeVille totalled by some old people in Florida. The car was T-boned in the left side and after it was picked up by the insurance company, some "expert" decided it could be fixed. My appraisal at the time was $5500. They spent over $9000 repairing it and when some parts were impossible to get, they just quit and gave me the car and $1200 "diminished value".

What a joke!... I feel your pain.
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