Recovering Diminished Value Can Help Your Business

Recovering funds through diminished value claims can be an important tool in improving customer satisfaction and a powerful strategy for developing future customers

As a collision repair professional, you are no doubt familiar with the concept of diminished value.  It is the loss or reduction in an automobile’s market value due to an accident. This loss occurs even when a vehicle has been repaired properly. Market forces at work assign a lesser value to automobiles after they are in an accident.  Both you and your customers instinctively know the vehicle is worth less after an accident repair.

In a recent case in Connecticut (and in similar ones throughout  New England)  involving a local auto body shop, a customer with a 2004 Mazda 6 was in an accident.  The car was repaired for $12,432.  A motor vehicle appraiser reviewed the work done and calculated that the diminished value was $3950. After filing in court, the insurance company paid $3200. 

Customers look to their collision repair experts for quality repairs and straight talk.  Successful shops know that they can establish trust and credibility by educating their customers on issues such as after market parts, their right to a rental car and their rights to a safe and proper repair. When shops provide this kind of valuable advice, it helps to cement the customer relationship and improves customer satisfaction. 

Helping customers understand diminished value and their right to be compensated for that loss can be a powerful tool as well.  When you help them recoup thousands of unanticipated dollars, you generate a tremendous amount of goodwill.  Think of the positive discussions your customers will have with their neighbors and friends about your business when they receive a check compensating them for diminished value.  There is no more effective advertising for your business than this kind of positive word of mouth.

Common Questions About Diminished Value

1.  When the appraiser inspects a repaired car, won’t they be evaluating the quality of my shop’s work?

Appraisers working on a diminished value claim assume that that the vehicle has been repaired properly and according to all factory recommenced repair standards.  The appraiser is primarily looking to evaluate the dollar amount and type of work done to determine the value of the car post-accident. 

2. Won’t the insurance company say the vehicle was repaired properly and has therefore not suffered diminished value?
Insurance companies will claim there is no diminished value because they do not want to pay the claim.  Even though the vehicle was properly repaired, it is still worth less because it has lost value in the open market.  Vehicle history reports and loss of warranty coverage are major contributing factors to this loss in value.

3. The insurance company says that state law doesn't allow diminished value claims.   Is this true?
No. Again, insurance companies say this because they are trying to avoid paying the claim. Case law supporting diminished value in liability claims has been around for nearly 100 years.

4. My customer’s vehicle is more than five years old.  Does it make still make sense to submit a claim?
Yes. Typically, vehicles that are less than five years old without prior damage and a significant amount of damage from the current accident are good cases for diminished value.  Any brand new vehicle with any amount of damage (no matter how small) is an excellent case for diminished value.  In addition, vintage vehicles, collector's cars or high-end autos are strong cases for diminished value. 

 6. Will my customer have to hire experts to present a claim?
An attorney with expertise in diminished value should have a relationship with a qualified appraiser, and vice-versa. Typically, the charge for these services are paid through the attorney’s contingency fee. In most states, claimants have the burden of substantiating their claim, so hiring qualified people is critical.   

2. What is the advantage of using an attorney to submit a diminished value claim?

Working with an attorney puts the insurance company on notice that the claim is serious.  Without an attorney advocating for a customer, most insurers will stall, delay or deny the claim.  There are attorneys with expertise in diminished value claims that are willing to work on a contingency basis which costs the customer only if the claim is successful.

Wreck Check of Bostonis the leading diminished value company in New England. They have performed thousands of vehicle valuations helping consumers recover hundreds of thousand of dollars.  For more information -mail bcollins@wreckcheckboston.com