Uninsured Motorist Hits and Runs: The Insurance Company’s Dodgy Diminished Value Denial
Today we are taking on a subject that can get quite convoluted and confusing. We want to talk about a current situation our customer is dealing with.
Ms. Fox’s troubles began when an uninsured motorist hit her vehicle and fled the scene, leaving her with significant damage. Seeking compensation, she filed a claim under her uninsured motorist (UM) coverage. However, a dispute over the cost of repairs forced her to use her collision coverage as the primary coverage so she could invoke the appraisal clause.
When a case like the one I am about to describe happens, it is hard for me to understand. If you’ve ever been in a dispute with an insurance company over the value of your automobile, then you know it can be a daunting task to get a fair settlement.
We’re as confused as her!
In a first party claim (where you’re making a claim against your own insurance company), if there’s a dispute, there’s normally a remedy written into the policy called “Appraisal”. Using this term is a bit tricky because, in most cases, the “Appraisal” remedy does not officially involve a written appraisal. Instead, when the dispute arises, either the insured or the insurance company can demand “Appraisal”, which is not the same as demanding “an” appraisal.
Appraisal as it is used in the policy means that each side picks an independent appraiser, and those two appraisers attempt to settle the dispute. If the appraisers can’t settle the dispute, they attempt to agree on an umpire (third appraiser) who will then try to resolve the dispute by seeing if they agree with either appraiser. Any two out of the three that agree to an award will bind the company and the insured to the award amount.
In the case that is the subject of this article, the insured owned a 1994 Nissan Avenir. Never heard of it? Yeah, me either, and I’m an auto appraiser, lol. Anyway, the vehicle is a right-hand drive utility wagon. It reminds me a bit of a Subaru Outback Wagon from the mid 1990’s. This particular vehicle was very clean and had very low miles (only 41,459 miles). The dealer where the owner bought it had it shipped over from Japan in 2019. In October of 2019, the vehicle was purchased for $6495.00. This was a pretty good price at the time. The vehicle is old enough that it does not have to meet the same stringent requirements in customs that newer vehicles do. So long as a shipping container can be obtained, then a dealer that is familiar with the Japanese market (where these right hand vehicles come from) can get one delivered for about $2500.00 (at least you could in October of 2019, before Covid 19 hit the world).
After the customer (who is an employee of the U.S. Postal Service) purchased the vehicle, she got to enjoy its reliability and practicality for a little less than a year before it was in a collision and deemed to be totaled by her insurance company (September of 2020). The insurance carrier, had their adjuster fill out the CCC valuation form to get a settlement value (you can read about CCC in some of my other articles), and once CCC did their thing and the owner fought for corrections, the offer for the vehicle was $4478.00.
Don’t forget, this offer was AFTER the owner had argued with the adjuster to get them to give her credit for options that the vehicle had which they had not originally inputted in the CCC portal. Unfortunately, even after arguing and reasoning and pointing out the reality that the offer was not fair, her carrier refused to negotiate and forced their customer to invoke the appraisal provision of her policy.
She did her research, hired me and named me as her appraiser, and we were able to get her carrier to name their appraiser. In typical fashion, the adjuster handling the claim was sorely unfamiliar with the appraisal clause process and how it’s officially navigated. I can’t image that carrier provided any training for appraisal clause cases. I have rarely dealt with any insurance company employee that was properly educated on the subject. Nevertheless, 10 days after the customer invoked the appraisal clause, the carrier named an appraiser with whom I was familiar.
At this point, since the other appraiser has been named, we’re supposed to discuss the loss amount and state our values. Instead, the other appraiser did something typical of an appraiser taking direction from an insurance company and delayed the claim by requesting information that is not part of the appraisal process, pretending all the while that it is required. The appraiser was clearly working for, and with, the insurance company to try and keep the claim expense down, without regard to the actual value of the property.
The company that the other appraiser works for is an appraisal company that seems to work exclusively for insurance companies. All the appraisers seem trained to be yes men for the insurance company clientele to which they cater. They do not seem to realize or care that they further victimize vehicle owners who have already been bullied by their carrier. I’ve been in business for myself over 12 years and working in auto claims for over 23, and my experience with this appraisal company and all of their appraisers (there’s about 4 of them that are all related), is that they are controlled by the insurance companies that hire them and are not truly independent.
Although the evidence points to them primarily working for the insurance company, I have been able to settle claims with them in the past, so I always try to give the appraisal company (even these snotty ones) the benefit of the doubt and discuss any case with them to see if we can settle it. Sometimes, because most carrier-oriented appraisal companies are not selecting comparable vehicles consistently, the initial number that the carrier’s appraiser comes up with is close enough to the real value that we can negotiate a little bit and settle the claim. Unfortunately, this appraisal company’s inconsistency is inconsistent and creates a realistic value scenario rarely and sporadically. In this case, the other appraiser placed a value on the Avenir of $3353.56. This is $1125.00 LOWER than the insurance company had already offered!
On top of that, the only comparable vehicle that the other appraiser located was still in Japan. Of course he did not account for any delivery costs to get it to the U.S.. After I saw his initial number, I emailed him saying that I couldn’t find any good comps in the U.S., but that my research indicated that the vehicle was valued at between $6500.00 and $7500.00. I did a lot of research and even called the dealer where vehicle was purchased. Because of Covid, the value of this vehicle increased from the time it was purchased until the accident. Covid caused a dramatic increase in shipping costs and, when the accident occurred (when the value must be measured), it was worth even more than she paid for it a year earlier. I tried multiple times to get the other appraiser to agree to a value of $6500.00. He refused to even discuss the value and without doing any additional research or even discussing what I found, he stated, “I don’t think I can come near that figure for just the value of the car alone based on what I found. I have attached my umpire list for your review.”
So. . . . 1) he found nothing comparable, 2) he did minimal research, 3) he refused to negotiate, and then 4) he sent me a list of umpires. I tried diligently to get him to agree to $6500.00. He wouldn’t discuss, insisting we cost both of our customers more money and go straight to an umpire. Although I can never trust an umpire to be fair, because of the strength of the research I had, I took a risk and agreed to an umpire.
Now for the perplexing part. . . .
We both provided our arguments to the umpire via email. I heard nothing for a couple of days. Then, all of the sudden, one day short of 90 days after the insured invoked the appraisal clause, the appraiser for the insurance company and the umpire signed an award for $7235.50 reflecting the ACV of the 1994 Nissan Avenir. Nobody discussed it with me at all.
Let me re-cap that for you again. . .
The customer’s carrier made a low offer on a total loss of $4478.00, so the customer invoked the appraisal clause to dispute the low offer. Then, the insurance company’s “independent” appraiser suggested a value of $3353.56 ($1125.00 LOWER than the original carrier offer). As the appraiser selected by the insured, I placed a value of between $6500 and $7500 on the vehicle and attempted to get the insurance company’s appraiser to agree to $6500.00, more than once. The insurance company’s appraiser refused to negotiate with me and made dilatory requests, unrelated to the formal appraisal process. His actions forced both the insurance company and the insured party to pay an additional fee to an umpire. All this just to immediately agree with the umpire to a value that was higher than I offered to agree to! I guess just the threat of having to talk to me was enough to get the appraiser in line. I mean, what was the point!?
If you want to know the names of the insurance company and appraisers and appraisal company referenced in this article, call my office. I’ll tell you straight up and you’ll know who to avoid! If you’re an insurance company playing games with your customers that invoke the appraisal clause, beware.
Whether you’re a vehicle owner, claims professional, or attorney, if you have questions about how the appraisal clause works or need help with anything regarding the property damage portion of an insurance claim, please call our office at 214-227-2154 and select option 1 to get a live person, and we’ll do our best to help you, or refer you to somebody that can! Information is always free at Petty Details, LLC!
DISCLAIMER:
Nothing in this article is to be construed as legal advice. Although the vast majority of policies contain a clause like the one described in this article, there can be differences in the process and rights based on the specific language of each policy.
Have you had trouble getting your diminished value claim settled?
So did our client Kelly in San Mateo, CA so she hired us as her experts. She had a 2016 Audi Q3 2.0T Premium Plus with over $20K in damage after an accident that wasn’t her fault and, although it should have been totaled, the at-fault insurance carrier INSISTED it was repairable!
She submitted her $6100 DV claim and got the typical immediate denial.
Because California only requires $5K in property damage liability coverage, insurance companies COMMONLY attempt to use this denial / delay tactic…
Here’s how it works:
The responsible carrier will refuse to address the victim’s out-of-pocket damages (like Loss of Use and Diminished Value), arguing that the VICTIM’S insurance carrier needs to subrogate first.
If this happens, the victim almost never gets paid for Diminished Value. Since your own policy doesn’t cover diminished value, you MUST get it from the at-fault person’s carrier so the subrogation claim must wait until you recover your DV.
Otherwise, the subro claim could exhaust the limits of the at-fault party’s policy, leaving you empty-handed with no way to recover. The Made-Whole Doctrine exists to combat this inequity (search more about this topic on our blog).
Once she made everyone aware that she knew her rights, Kelly got the full Diminished Value settlement of $6100 and her insurance company was forced to wait on their subrogation claim.
Do you need a great expert appraiser to help with your diminished value auto claim?
You can get a FREE claim consultation today to talk about your claim with one of our experts!
If you’re getting a less than fair offer and being given some fake excuse why they won’t pay or being told “take it or leave it” on your low value diminished value or total loss claim ($3500 or less and damages are not your fault), then you have a tough realization to come to.
That realization is that you CANNOT obtain justice.
No joke, you can’t win unless you ignore the economics of it and define justice solely as having your day in court and winning.
Let me say it again. . .
Unless you spend the majority of the $3500.00, YOU CANNOT OBTAIN JUSTICE if you have suffered $3500.00 or less in property damages like diminished value or a total loss and the person responsible, or their insurance company, is refusing to pay for the full amount of damages.
Ever so often, an insurance carrier or at fault person will surprise me and simply pay for what they owe, but most of the time, they let their insurance company deny payment, or they personally refuse to pay for the full amount of damages. That nothing can be done is so hard for people to accept / believe that victims refuse to believe it and constantly attempt to convince me that I am wrong and that if I will just help them, they will prove they can get justice.
Questions you need answers to!
Below I have listed the 10 most common arguments / questions I hear when I tell victims that their claim is a lost cause, and then below that, I have listed the answers I give them. . . .
1. No way, that’s why we have a legal system, there has got to be something I can do, right?
2. You mean to tell me that the insurance company can just get away with not paying?
3. Isn’t it illegal for them to deny my claim?
4. Won’t the department of insurance help me?
5. That ain’t right! I’m gonna call a better expert – do you know anybody?
6. Well, I am going to sue the insurance company immediately, can you send me information on small claims court?
7. Fine, if you won’t help, then can you refer me to an attorney?
8. If I spend the money to fight and I win, the other side will have to pay back my attorneys fees and costs, right?
9. Whatever Justin, I will sue and get the insurance company in trouble for DTPA violations (deceptive trade practices), you didn’t think of that, did you?
10. I will get the media involved and expose this – that’ll work, right?
Want to hear the truth bombs from an expert??
Click below to find the answers to all of these questions and more!
Let me make this really clear up front: We are not tax professionals!
We do not give tax advice. We are simply pointing you to information to aid in your research when filing your taxes after taking a loss in value after an auto accident.
Did you know that casualty losses are deductible from your income taxes?
In Topic 515 on the IRS’s website, it discusses the types of losses that can be claimed on your income tax.
This is a hard subject to explain to a lot of people.
Let me start by saying that you need to understand what is in this article before you blow your top at some insurance adjuster. There are ways around a reservation of rights defense, but you have to be stealthy and, above all, you have to remain calm.
If you have found this article, you are either an insurance adjuster doing some research or you are involved in a claim and being advised that your claim is not being paid at this time and that they are putting the claim on a “reservation of rights”.
I’m going to speak on Texas and specifically on auto insurance as Texas is my home State and auto insurance is where I have the most experience, although the reservation of rights or its equivalent exists in almost every State in the U.S. and can come about on claims that are not automobile claims.
Recently, I had a case where an adjuster was negotiating an inherent lost market value claim based on values and condition descriptions found in Kelley Blue Book.
The amount of inherent lost value, or diminished value or DV as it is common to call it, that the adjuster was willing to pay was about $4000 less than what my research and opinion came out to.
Obviously, I argued that KBB was not accurate.
Naturally, the adjuster requested a synopsis on why I believed that using Kelley Blue Book was not a reliable method for researching diminished value.
I happily obliged the adjuster.
Want to read more about why using Kelley Blue Book (or any other online valuation guide) to calculate diminished value is a severely lacking and inaccurate method?
Back in May, I saw a sad story about a filmmaker in South Africa that was killed by the head butt of a giraffe out in the bush while filming for a movie.
In my mind, I related that to how the giant insurance companies just throw around invalid denials to diminished value claims to shut down the claimant from figuring out how in the heck to fight, therefore making them give up.
Until they find us.
A while ago, I was provided with a pretty big list of arguments that attempted to show why diminished market value on automobiles is not real, or at least why it is never very much.
I am going to address each one, point by point so as to be very thorough.
Mind you, these arguments were made by a professional who evaluates the market of stigma losses on automobiles.
How Our Client’s $5000 Success Can Lead the Way to Your Success!
Having an uninsured motorist or under-insured motorist diminished value claim (UM/UIM claim) doesn’t usually qualify for the fun list, but if you’re faced with having to deal with this type of diminished value, it pays to educate yourself about these types of claims! It paid our client $5000 to be precise!
Let’s start this article out right with the great news! We just had a client go to court in Collin County, Texas and she got a big win thanks to our appraisal, expert help and our attorney who stepped in to get that case into court! More details about that case are a few paragraphs below so keep reading!
The Norm for Uninsured Diminished Value Claims – a BIG FAT DENIAL
Believe it or not, the vast majority of insurance adjusters do not get any training on how to handle an uninsured motorist diminished value claim. In fact, insurance companies routinely refuse to pay for uninsured motorist diminished value claims and make up all kinds of excuses why they don’t owe for them. It’s just a claims handling tactic meant to deter people that don’t have much wherewithal or persistence. With just a little bit of research, you can prove to yourself that your own insurance company owes you for any inherent diminished value you sustain due to an uninsured or under-insured motorist.
The best case to cite for a Texas uninsured motorist diminished value claim is the Noteboom vs. Farmers case that you can easily find with an internet search.
Now, don’t get all excited since you now know the truth.
You can rest assured that even with the exact right answer and perfect evidence, the insurance company will balk and typically refuse to pay anything near the real diminished value amount. When that happens, you have to know how to bring your claim to a close without messing up your ability to use the court system.
How Can You Fight for Diminished Value on your Uninsured Motorist Policy?
If you’ve done some Googling because of a total loss dispute with your insurance company, you probably came across information explaining your right to appraisal (also called the invoking the Appraisal Clause).
Unfortunately, because auto total loss disputes are usually less than $10,000.00, it is an area that hasn’t traditionally attracted attorneys (but there are a few attorneys that will fight for you).
In fact, because the amounts in dispute are typically under $10,000.00, most insurance companies don’t even train their claims staff about the appraisal clause.
I know.
I was an adjuster for over a decade and NOT EVEN ONCE was the appraisal clause mentioned. If you invoke the appraisal clause, you can bet that you will be dealing with a claims representative that has no clue what they are doing (if you’re an adjuster that thinks you know better, prove it).
I educate adjusters and insurance carriers every week about this little known right that their insureds have.
