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In November
2001 the Georgia Supreme Court ruled in favor of two State Farm
customers who asserted that wrecked cars are worth less simply because
they have been wrecked — no matter how expertly they're repaired — and
that insurers are liable to pay the difference. Because of that ruling,
all auto insurers in Georgia must now pay diminished value
claims. In January 2002, Allstate settled a similar class action case
in Georgia, agreeing to pay Georgia policyholders a total of $59
million for the diminished value of their cars repaired after crashes
since January 1997.
Diminished
value lawsuits have seen varied success around the country. Successful
cases are generally made by third-party claimants in an accident, not
the insured.
"We believe that the courts [in previous diminished-value cases]
were not interpreting contract language and were not setting forth any
public policy prohibiting insurers from amending their contracts with
an exclusion for diminished value," says a spokesperson for the ISO.
The purpose of the ISO filing was to clarify that current policies do not cover diminished value for first-person property-damage claims.
Proving diminished value boils down
to a comparison between the pre-accident and the post-accident values
of your car. You can get an idea of how much your car is worth before
an accident by taking it to dealers for quotes or by using the National
Automotive Dealers Association price guide or Kelley Blue Book.
However, putting a value on your vehicle after an accident is more
complex, and you should have your vehicle inspected by a repair
facility such as a Wreck Check franchise that uses a diminished-value
software program, by an independent appraiser, or by a dealership after
it's been repaired. The inspection can cost anywhere between $75 and
$150.
It can unearth
problems you might not be able to see. For example, the trained eye of
a professional will be able to spot unrepaired frame damage.
Refinishing techniques might have also been substandard. The inspector
will determine what, if anything, is wrong with the repair. Make sure
you get that in writing.
You can then take the diminished-value report to your insurer and
request a rerepair or diminished-value payment. If your insurer
objects, ask the insurer to put in writing why it refuses to pay. Plus,
have the company supply the policy language that shows your car's
diminished value is not covered.
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