UM Diminished Value claim after an Appraisal Clause Repair Dispute – is it possible?

Uninsured Motorist Hits and Runs: The Insurance Company’s Dodgy Diminished Value Denial 

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 she sought compensation for Diminished Value (DV), her insurance company responded: 

“Diminished Value (DV) is not a provision under collision coverage. DV is only owed under liability coverages such as property damage and uninsured/underinsured motorist property damage. Similarly, Right to Appraisal is not a provision of the liability or uninsured/underinsured motorist coverages. Right to Appraisal only exists under first-party coverages such as collision and comprehensive. Diminished Value and Right to Appraisal cannot be pursued together since they exist under different coverages.” 

The insurer’s response is an attempt to separate DV from the appraisal process by claiming that these benefits are confined to different coverages. The carrier might argue that Ms. Fox’s uninsured motorist (UM) coverage alone could have been sufficient to cover all her losses, thereby making Texas Insurance Code Section 1952.107(b) inapplicable: 

“If neither the collision coverage nor the uninsured or underinsured property damage liability coverage is sufficient alone to cover all damage resulting from a single occurrence, the insured may recover under both coverages.” 

However, this argument overlooks a critical issue: if Ms. Fox had relied solely on her UM coverage, she would have lost her right to invoke the appraisal provision—a right that is only available under collision or comprehensive coverages. The appraisal clause is crucial in situations where there is a dispute over the cost of repairs, as it provides a method for resolving disagreements without litigation. 

By forcing Ms. Fox to use her collision coverage to access the appraisal process, the insurance company is effectively creating a Catch-22. If she uses her collision coverage to resolve the repair cost dispute, they deny her DV claim, citing the separation of coverages. But if she had relied solely on UM coverage, she would have been deprived of the appraisal process entirely, potentially leaving her with an unfairly low repair estimate. 

The insurer’s attempt to compartmentalize these coverages to their advantage undermines the comprehensive protection that the policyholder is entitled to under the law.

Texas Insurance Code Section 1952.107(b) allows for the use of multiple coverages when necessary to fully compensate the insured. The carrier’s stance is not only a misinterpretation of the law but also a tactic to avoid paying what’s rightfully owed, including Diminished Value. 

Ms. Fox’s case highlights the importance of understanding your rights under the law and ensuring that insurance companies do not dictate the terms of your recovery in a way that limits your coverage unfairly.

When an uninsured motorist causes damage and a repair dispute forces you to use collision coverage, you should not be denied full compensation, including Diminished Value, simply because you exercised your right to an appraisal. 

Disclaimer: This article is intended for informational purposes only and should not be considered as legal advice. For legal advice regarding your specific situation, please consult with a qualified attorney.