Diminished Value
Diminution of Value in Louisiana Auto Wrecks
Generally, victims of automobile accidents are concerned with the structural and cosmetic damage to their vehicle and their bodily injury. However, accident victims should not forget about the loss of value their vehicles suffer as a result of the accident. This is known as diminished value or diminution of value. Diminished value is the reduction in a vehicle’s market value even if the vehicle is fully and completely repaired.
Simply put, buyers aren’t willing to pay as much money for a vehicle that has been damaged when compared to the same vehicle with no damage history. This fact has been proven by market research and analysis. In a survey of more than 4,700 respondents, approximately sixty percent (60%) stated they would not purchase a vehicle with damage to the frame, and even if no frame damage occurred in an accident, about twenty percent (20%) of respondents would expect a forty percent (40%) reduction in the price of the vehicle with property damage. In another survey, even assuming the vehicle was expertly repaired, 64.8% of respondents indicated they would not consider purchasing a vehicle that had an accident repair history. More alarming, 98.15% of consumers surveyed stated they would not pay the same price for a vehicle that was involved in an accident compared with an identical, undamaged vehicle.
Consumers are not the only ones seeking a reduction in price for previously damaged vehicles. In a survey conducted by Auto Appraisal, Inc., auto dealers reported they typically diminish a vehicle’s value between 15% and 50% if the vehicle has suffered significant damage in an automobile accident. Thus, market reality dictates that vehicles suffer a loss in value when they are involved in an accident. Undamaged vehicles command a higher price in the re-sale and trade-in markets than the same make and models that have been damaged. This evidence is now widely accepted and known to all in the industry, including auto insurers who continue to deny or ignore the claims.
Today, diminished value is universally recognized as potential buyers have easy access to vehicle history reports from online services like Carfax, AutoCheck and instaVIN. These websites provide instantly available consumer information about a vehicle’s prior damage history.
In response to these readily available consumer and insurance databases, and the glaring losses experienced by owners of vehicles damaged in accidents, the Louisiana legislature passed La. R.S. 9:2800.17 in 2010, which codified a vehicle owner’s right to collect damages for diminished value, even though Louisiana courts have recognized diminished value claims for more than fifty years before La. R.S. 9:2800.17 was enacted. Louisiana Revised Statute 9:2700.17 states:
Whenever a motor vehicle is damaged through the negligence of a third-party without being destroyed, and if the owner can prove by a preponderance of the evidence that, if the vehicle were repaired to its pre-loss condition, its fair market value would be less than its value before it was damaged, the owner of the damaged vehicle shall be entitled to recover as additional damages an amount equal to the diminution in the value of the vehicle. Notwithstanding, the total damages recovered by the owner shall not exceed the fair market value of the vehicle prior to when it was damaged, and the amount paid for the diminution of value shall be considered in determining whether a vehicle is a total loss pursuant to R.S. 32:702.
Thus, when someone’s vehicle is damaged through no fault of his own, the at-fault driver’s insurance company should pay the claimant for the fair market value loss, or diminished value or diminution of value, the vehicle suffered as a result of the accident. This amount should also be used in the determination of whether the vehicle is a total loss.
Unfortunately, most insurers ignore diminished value claims in Louisiana even if a specific demand is made. This inaction of not timely paying a claimant for the diminished value loss may subject the insurer to additional damages, statutory penalties, attorney’s fees and costs pursuant to La. R.S. 22:1892.
If you were involved in an auto accident that was not your fault and your vehicle was damaged, contact the attorneys at Bohrer Brady LLC, by calling 1-800-876-3911 or emailing us for a free initial consultation to determine if the insurance company owes you diminished value. If the insurer has not timely adjusted or paid your claim, you may be entitled to additional damages, statutory penalties, attorney’s fees and costs.
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