DIV

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We are THE Diminished Value experts!

So what is Diminished Value (DIV)?

How is it accurately measured? Who is entitled to it? These are the
questions that we will address. We will break down and examine many
false presumptions that insurance companies use to mislead the public.

MYTH 1: Your lost value cannot exceed the
amount of the repair.

REASON: First of all, you suffer the greatest
loss of value from discernable repairs. This
includes paint and body work, frame damage,
core damage, and airbag deployment. On
mechanical repairs, such as a new engine,
little to no value is lost. Therefore, the cost of
the repair has no bearing on the DIV.

The location and nature of the repair need to
be factored in. A prime example: A 2003
Chevrolet Tahoe with 30,000 miles suffers a
rear collision. The bumper is slightly bent.
This bumper is attached to extended frame
rails that are shown to be bent. To fix this
Tahoe and straighten the frame tips would
run about $780. However the fact that the
frame was damaged, and that the towing
capability of the vehicle is impacted, the DIV
can be as great as $3500.

MYTH 2: Your car has not lost value if the
repairs were done correctly.

REASON: Look, whether you are a customer
researching DIV, or you are an Insurance
Agent researching our company, let’s be
reasonable. If you are going to purchase a
vehicle and you find out that it was in a wreck,
YOU WILL NOT PAY THE SAME PRICE as you
would for an undamaged vehicle. And if you
think that an insurance company can
convince a court that you do not lose value,
you are wrong. In the history of the Texas
Legal System, there has not been a single case
were a court agreed that a vehicle did not lose
value after experiencing an accident. They
have agreed that the first party, or person at
fault for the accident, could not collect the
DIV, but the third party, or victim, has always
been able to collect it.

MYTH 3: The insurance company will happily
send you a check for DIV, so you don’t have to
go through the hassle of establishing it
yourself.

REASON: Did you let the insurance company
repair your vehicle, or did you take it to a
local body shop? Of course you took it to a
body shop, people who would look out for
your best interest and make sure the proper
repairs were done. Now, why would you trust
those nice insurance people to give you
everything you deserve? They are in business
to make and save money. You need an expert
on your side to insure you get what you are
entitled to receive.

MYTH 4: We are the BIG INSURANCE
COMPANY, and you don’t stand a chance!

RESPONSE: Did we mention that there has
never been a case in Texas Court where an
accident victim has LOST a DIV case?

First, let us examine what is DIV.

If you are in an accident and you have your vehicle repaired, you will suffer a loss of value. Even assuming that the repair is perfect, most
states require you to reveal the accident to anyone who wishes to purchase your vehicle. The knowledge of the accident will cause a loss of
value. If you trade the vehicle into a dealership, they will easily spot even the best repairs.

If you are the victim of the accident, then you are required by law to be “made whole,” or be compensated for any loss you suffer as the result of
the accident. Everyone knows that you are able to have the vehicle repaired by the responsible party. What 99% of people do not know is that
they are able to claim this DIV, or loss of value.

There are many myths about
the process of establishing
DIV amounts. We need to
look at these, and find out
why they are not accurate:

It is usually acceptable in a court room to present any method that can be explained
and used reasonable by a purchasing authority, such as a car dealership. However,
insurance companies use several methods that are inaccurate to determine a value
that is much lower than you deserve. Let’s examine these:

METHOD 1: 17C, or “The Georgia Rule”

Let me quote an article by E. L. Eversman (which can be found in its entirety by
clicking the button above marked “The Law”.)

appropriate initial vehicle value and that 10% of that NADA value will appropriate
initial vehicle value and that 10% of that NADA value will represent the maximum
decrease in value suffered. Often there are no NADA values for particular vehicles,
especially in the beginning of a vehicle's model year. Additionally, the 17c formula
provides no explanation substantiating why 10% of the NADA value is an
appropriate base figure for the decrease in value. Then, there are multipliers and
discounts and subjective determinations as to how severely a vehicle has been
damaged, none of which have any real relationship to the actual change in fair
market value of the particular vehicle.
change in fair market value of the particular vehicle.

Insurers using this "formula" are, in many instances, paying diminished value for
vehicles, which have not truly suffered any decreased value. Likewise, the actual
diminished value suffered on other vehicles is significantly greater than as
calculated under the 17c formula, and consumers are not being properly
compensated for the decrease in value. As a result, how will any insurer be able to
project future diminished value claims with any degree of accuracy?

Additionally, consumers are often falsely led to believe that the 17c formula is the
only applicable method for determining diminished value, when this is simply not
the case. For those who contest the 17c-determined amount, insurers also place the
responsibility on their insureds to "disprove" the 17c amount, which leaves
claimants uncertain of their rights. Under the Mabry decision, however, the burden
is on the insurer to establish that its valuation method is an "appropriate
methodology and procedure". It is important for consumers to know that they have
the right to a second opinion and do not simply have to accept the dollar value
resulting from the 17c formula. Nor should they, because it is almost never correct.

METHOD 2: Basing DIV on the amount paid for repairs.

We have found a surprising number of insurance companies who base the DIV
amount on the cost of the repairs. This is completely inaccurate. The cost of the
repair does not determine whether the vehicles intended function has been impacted,
nor if the repairs can be noticed by a purchaser of the unit. How does the price of a
bumper determine if there is lost value?

METHOD 3: Basing DIV on the simple opinion of the adjuster.

We do not practice law. We are not formally educated or licensed to do so. Likewise,
a claims adjuster does not have the knowledge, training, or background to determine
the effect of the market on used or damaged vehicles. The opinion, without factual
basis, of an adjuster has no bearing on the loss of value a vehicle suffers after an
accident.

THE CORRECT WAY TO DETERMINE DIV

The proper way to determine DIV is to assess the vehicle with the same process a used
cars manager would. First determine the value of the vehicle, in excellent condition.
Then list the repairs that will be noticed on a typical “walk around,” or visual
inspection. This includes any and all paint work, frame damage, core support
damage, body filler, and airbag deployment.

Once you have determined the initial value of the unit, and the areas that are listed
above, devalue the unit based on a percentage for each of these areas. It is important
to avoid two key areas that are claimed by inexperienced adjusters: Do not devalue
for quality of work, as the body-shop warranty will cover this; and do not devalue for
mechanical repairs, as these are not typically considered by a used car manager. The
final result of your devaluation should then be cross checked with current market
data to verify the loss is with range of the market.

So how is DIV to be measured? Well, there are no set
standards.

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