Invalid Diminished Value Claim Denials – 8 Unfair Examples

If you’ve had the displeasure of being in an accident where your vehicle was repairable, you’ve probably experienced a loss in the resale value of your vehicle, no matter how well it was repaired.

Additionally, in the vast majority of cases the insurance company that is responsible for settling the claim with you gives you an unfair and invalid diminished value claim denial.  In my view, the denial of these valid claims is an act of fraud.

If it is fraud, then why doesn’t the insurance company get in trouble for it?

The primary reason is that there are very few attorneys and even fewer accident victims that really understand the denials.  Because of that, it is difficult for the accident victim to defeat the illogical and unlawful reasons that insurance companies use to deny diminished value claims.  I thought long and hard about what I could do to help accident victims get fair compensation for lost value, and outside of preparing an appraisal for them and directing them to an attorney that will take their case, the best I can do is to educate.  So that is exactly what I will do right now!

I’ve already published one article that gives some responses to common denials, but in this post, I am going to pull out the stops and address every denial reason I can find, and provide all the proper reasons why the denials are invalid, improper, and in most cases, fraudulent.

Invalid Diminished Value Claim Denial Reason #1

– There has been no actual monetary loss.

– You have to sell the vehicle to realize the loss.

– You can’t lose money on a vehicle you haven’t sold.

– Until you have sold the vehicle, you cannot claim diminished value.

Why the denial is bogus:

  1. Because the denial implies that value cannot be determined without an actual sale, which is totally not true. Value is determined by formal appraisal.  How does one know how much to insure their Rolex for?
  2. If the denial is proper, then how do insurance companies determine the settlement amount they should give to vehicle owners when the vehicle is totaled and cannot be sold in it’s pre-accident state?
  3. Damages are calculated at the time of the loss or reasonably soon thereafter, not at some point in the future.  You can read the jury instructions that are given to juries when they are asked the amount of damages to award, and you will see they are asked to measure the value before the harm against its value after repairs have been made, not at some point in the future if it is sold.
  4. The used vehicle market changes, and the person who causes damages does not get to pick when to check market prices. The time when the damages occurs is when the market is to be measured.
  5. Vehicles naturally depreciate over time. This is why the damages are calculated at the time the loss occurs.  To calculate otherwise would be to reward the at fault person by letting them get the benefit of depreciation and reduce what they owe simply because they wait to pay.
  6. The chance that the property will be destroyed before it is sold.
  7. If you do sell the vehicle at a loss, will the insurance company pay the loss amount? How will you agree as to the value of the vehicle prior to the loss, since you can’t sell it in that condition?
  8. There is no law to support the denial reasoning.

Invalid Diminished Value Claim Denial Reason #2

– Diminished value is speculative.

– Your damages are only a theory.

– The amount requested is solely based on an opinion.

– We don’t owe for stigma damages.

Why the denial is bogus:

  1. Appraisals are valid evidence, and whether there is any theory, speculation, or opinion involved in producing an appraisal is not a factor in its admissibility in court. Damage estimates and
    Manufacturers Suggested Retail Prices are also opinions, speculative and based on theory, but that does not mean that they are not credible data points.
  2. There is no law that says a damage amount based on theory is not recoverable. I mean, don’t insurance companies pay for future medical expenses on injury claims?  If so, then why?  Aren’t those damages based on theory, speculative, and solely based on the opinion of a doctor?
  3. Rules of evidence in EVERY state, as well as in federal court allow for experts to provide opinions as evidence!  If they claim an expert opinion is not valid, they must explain why.  The opinion of an expert is still valid evidence unless the opinion was not arrived at properly or based on improper facts or data.
  4. One factor that appraisers who are measuring the market and value of a vehicle must consider is whether or not there is any stigma or provenance attached to the appraised property. Stigma is not a damage, it is a reason for damage.
  5. There is no law that says a victim cannot recover damages that are a direct result of a stigma causing accident. The stigma that wrecked and repaired vehicles pose a higher risk of malfunction is completely provable and recoverable.

Invalid Diminished Value Claim Denial Reason #3

– It is our opinion that when factory replacement parts are used and proper repair procedures are utilized, then a diminishment in value does not occur.

– We don’t believe in diminished value.

– The repairs were done right, so there is no lost value.

– Repairs restored your vehicle to its pre-loss condition.

Why the denial is bogus:

  1. Insurance adjusters, insurance defense attorneys, insurance damage estimators, claims supervisors, and claims managers are not qualified to give opinion testimony regarding the value of vehicles, and if they work for the carrier paying the claim, they could never certify an appraisal as an unbiased party.
  2. Not believing in something does not make it imaginary. It is like if you or I said that it is our opinion that gravity does not affect us.  Whether the insurance company believes in diminished value or not, that belief does not change the fact that diminished value exists as a real loss, and that it is measured by appraisal.
  3. There is no way to determine if repairs were done right without taking the vehicle back apart. The risk that they may not have been done right is a big reason for the negative stigma associated with wrecked and repaired vehicles.
  4. Repair procedures are different from manufacturing procedures.
  5. Higher tolerances are allowed in repairs than are allowed in initial manufacturing.
  6. Rust proof dipping, cold weld fusions, precise robotic seam and weld placements, and many other techniques typically used in manufacturing are too financially straining for collision repair facilities to duplicate.

Invalid Diminished Value Claim Denial Reason #4

The law says we don’t owe for diminished value.

– Diminished value claims are not allowed by law.

– Diminished value is not legally recoverable.

Why the denial is bogus:

  1. Show me the law. Insurance adjusters are not attorneys, and they cannot create or interpret law.  The fact is that when a person negligently damages your property, you are entitled to recover all of the damages that are a result of the person’s negligence, which includes any value lost.
  2. In more than 95% of the United States the law allows for recovery of inherent diminished value due to another’s negligence. As an example, recently the California Supreme Court’s Judicial Council revised the jury instructions to clarify that diminished value damages ARE recoverable.  The law in California already allowed for diminished value recovery, but they were one of the worst states for carriers lying and misleading victims.

Here is the new 2016 California jury instruction which is now similar to the jury instructions in all states:


 “To recover damages for harm to personal property, [name of plaintiff] must prove the reduction in the [item of personal property e.g. automobile]’s value or the resonable cost of repairing it, whichever is less.  [If there is evidence of both, [name of plaintiff] is entitled to the lesser of the two amounts. 

However, if you find that the [e.g. automobile] can be repaired, but after repairs it will be worth less than it was before the harm, the damages are (1) the difference between its value before the harm and its lesser value after the repairs have been made plus (2) the reasonable cost of making the repairs.  The total amount awarded may not exceed the [e.g., automobile]’s value before the harm occurred.“ (Emphasis added)

Invalid Diminished Value Claim Denial Reason #5

– The vehicle has not been repaired.

– You can’t get Diminished Value before the repairs are finished.

– We have to wait on the repairs to be done.

Why the denial is bogus:

  1. The extent of damage and how it will affect the value of the vehicle when repairs are properly completed can be calculated without the need for repairs to actually be completed.
  2. If the repairs are not done properly, the repair facility will be at fault for improper repair, and the inherent loss of value, notwithstanding proper repairs, will not be affected by unfinished or improper repairs. The inherent loss of value assumes that a proper repair can and will be completed.
  3. It’s not really a denial, but a delay tactic. If there is some problem with the repair, is the insurance company going to make the repair facility fix it for you, or are they going to just tell you there is no lost value because the repair is not good?  On the other hand, if the repairs are guaranteed and high quality are they going to refuse to admit the stigma of defect and lesser value still remains?
  4. There is no law stating that repairs must be completed before diminished value can be recovered / calculated.

Invalid Diminished Value Claim Denial Reason #6

– If you sell the car to an individual, you don’t have to tell them the car was in a wreck.

– We aren’t going to report the accident to Carfax.

Why the denial is bogus:

  1. Have you ever heard of fraud? To me, the denial reason #6 is the most preposterous.  Insurance carriers that use this type of denial are flat out soliciting a crime.  As proof of this just take a moment and do an internet search for Jason Fisher v. Robin Huff and Charles Huff, No. SCV-240079 out of Sonoma County California.  If you trust me without looking it up, then the summary is this. . . . a person sold a car to another person and didn’t tell them the truth about the accident history, then the person that bought it sued the sellers and the court confirmed that selling the vehicle without telling about the prior damage was fraud.  The court ordered the sellers to pay for the diminished value, for punitive damages, and for all the buyer’s attorneys fees.  It amounted to over $85K.  Sure, just don’t tell the truth when you sell it, that fixes it. . . . geez.

Invalid Diminished Value Claim Denial Reason #7

– Diminished value damages are not covered under our insured’s liability policy.

– Diminished value damages are not “physical damages to tangible property”.

Why the denial is bogus:

  1. Diminished value is a direct consequence of physical damage to personal property, and there is no law that says diminished value is not recoverable in a lawsuit against a negligent party (which the insurance policy must pay).
  2. Language in an insurance policy cannot nullify legal precedence, common law or public policy. Stating that words in a policy can protect the carrier from having to pay actual damages is very misleading.
  3. Infinity insurance is the biggest abuser of denial reason #7.  To demonstrate the insanity in the argument, let’s test it with another type of damage: “loss of use”.  Insurance companies always pay for the loss of use of a damaged vehicle, but loss of use is not physical damage to tangible property, right?  Loss of use then, according to the argument that the policy only covers physical damages to tangible property, is not covered.  Why, then, do they pay for loss of use ever?  I’ll tell you why: because damages that are owed under a liability policy include economic damages that are a direct result of physical damages, just like diminished market value is.  Changing the wording to say we only pay for damages that our insured causes on Friday, is another type of policy condition that would be null and void as against public policy.  Boom!

Invalid Diminished Value Claim Denial Reason #8

– Your vehicle was in a prior accident, so you can’t get diminished value on this accident.

Why the denial is bogus:

  1. One accident is bad, two is worse.
  2. Over time, natural depreciation eats away at the immediate loss of value from a collision, so if a prior accident was over 2 years ago and was not a major accident, then that prior accident is not likely to still be affecting the pre-accident value. This is also the reason why it is not allowed for the insurance carrier to refuse payment until you sell the vehicle. . . . natural depreciation.
  3. There is no law that says a prior accident eliminates future inherent lost market value. A scratch on the bumper cover of a Corolla, three years ago, first, no longer affects the value, but surely does not stop it’s value from decreasing following a new repair of damages to the vehicles structure.


The Real Problem with An Invalid Diminished Value Claim Denial

I hope you can see that the real problem with an invalid diminished value claim denial is that it is not easy to come up with the right argument against them. 

To really be prepared, you nearly have to be an attorney or expert.  Even knowing the proper reasoning for the invalid denials does not guarantee that a carrier who is using those types of denials will come to their senses and pay your claim. 

They should, but if they used improper denials, I wouldn’t put it past them to just refuse to pay without a good reason and see if you have what it takes to prove your case in court. 

If you need help, or if you have received any other type of denial, please reach out to my office by filling out the form below and provide me with details so we can make sure that the best minds in the industry review it and give you the proper feedback.

Before I close out this article, I want to point out that although the reasons for denial of diminished value that I have listed above are not valid, there are some valid reasons for an insurance company to deny your claim for diminished value, but they are few.

Here’s a quick summary of VALID reasons for a Diminished Value denial:


  1. You have had another recent, prior, and substantial accident in the same vehicle.
  2. You are trying to get your own collision coverage to pay for diminished market value (this is only a valid denial in certain states).
  3. You were at fault for the accident (again, only a valid denial in certain states).
  4. Diminished value is excluded by your own policy.

Information is always free at Petty Details, LLC!


Disclaimer:  This article is intended for informational and educational purposes only and is not to be construed as legal advice. Please consult a qualified attorney with legal questions.

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