It is well-known that most personal injury clients involved in a car wreck resulting in soft tissue injuries are more concerned with getting back on the road than their aching neck or sore back. Due to the lack of financial incentives for handling property damage claims, most personal injury attorneys shun away from representing clients for property damages altogether. With that in mind, a personal injury attorney can differentiate himself/herself by offering help on property damage claims and have the financial incentives as well through representing clients for their diminished value claims.
II. What is Diminished Value?
Diminished Value ("DV") is the reduction in a vehicle's market value after a vehicle is wrecked and repaired. In 2001, the Supreme Court of Georgia held that insurance companies are required to pay DV claims. (See Mabry v. State Farm Mutual Automobile Insurance Co., 274 Ga. 498, 556 S.E.2d 114 (Ga. 2001)). DV claims are based on the reality that vehicles are worth far less after they are damaged in collisions--even after repairs are made. Most prospective buyers, whether they are dealerships or individuals, will not buy a wrecked and repaired vehicle. If they were to even consider purchasing it, they would demand a substantial discount. Like refurbished electronics, DV is a simple concept that EVERY judge and juror can understand.
III. How to Calculate DV
Insurance companies contend that the appropriate method for calculating DV is a formula called 17c. This formula comes from Mabry v. State Farm. The accurate way for calculating DV is simple. It is the fair market value prior to the accident minus the fair market value after the accident and repairs. For example, your car has a fair market value of $20,000 and unfortunately you are in a car accident on your way to work. After all proper repairs, the fair market value of your car has been reduced to $16,500. This means the diminished value of your vehicle would be $3,500. Why don't insurance companies use this simple formula instead? The answer is simple; 17c favors the insurance company while hurting the victim of the accident.
A.Why the 17c Formula is Flawed - According to Diminished Value Georgia
a. For starters, 17c allows for "double deductions" for mileage of a vehicle. Insurance companies use NADA to assess the fair market value of a vehicle. NADA already takes into account the amount of miles on the vehicle. However, 17c includes an additional "mileage modifier." This mileage modifier reduces the NADA value even more based on the number of miles on the vehicle. There is no reason to deduct more value for mileage when the NADA already considers mileage when making its estimates.
b. Another flaw in 17c is the use of a "damage modifier," which takes into account the "nature and extent of the damages should be based on actual physical damage sustained by the vehicle, without using the cost to repair as a basis." This statement makes absolutely no sense! It is impossible to accurately assess the damage of a vehicle without taking into account the cost of repairing the vehicle.
c. The damage modifier includes several options for the adjuster to evaluate the extent of damage, such as "severe, major, moderate, minor, and no structural damage." This is a purely subjective form of assessment. Allowing the adjuster to choose from these ambiguous options is unfair to your client because the damage modifier does not consider the cost of repair to the vehicle. For these reasons, among others, 17c is NOT an accurate formula for calculating DV.
B.The Right Way to Calculate DV
There are no statutory guidelines for calculating DV. However, there is case law.
According to DVClaim.com Experts, diminished Value is:
a. The difference of the fair market value pre and post collisions; and
b. The reasonable cost of repairs, with hire on the vehicle while rendered incapable of use and the value of any additional permanent impairment, provided that the aggregate of such amount does not exceed the fair market value before the collision.
Calculating DV by these methods is simple and fair. It is a simple concept with simple math [(fair market value before accident) - (fair market value after repairs from accident) = DV]. It is only fair that your clients receive the decrease in value to their vehicles as a result of the collision.
IV. Best Way to Prove DV
According to O.C.G.A. § 24-9-6, one need not be a dealer or an expert to assess the value of the vehicle. However, the best way to determine the DV of a vehicle is to hire a reputable independent appraiser to assess the DV of the vehicle, such as Antoine Rached of Diminished Value of Georgia.
DVClaim.com is a website designed to help attorneys and insurance professionals alike in obtaining Diminished Value auto appraisals as well as total loss and vehicle valuation reports.
For more information about Diminished Value Claims, contact Antoine Rached at DVClaim.com or call 678-404-0455.
This article was written with the assistance of Alex Nguyen from HQNLawFirm.
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