QuestionQUESTION: My insurance argues the diminished value is related to the vehicle structure damage. The insurance states the 17c formula starts with 10% of the NADA retail value which is the maximum recovery for diminished value. This amount can be reduced by two modifiers based on the extent of damage and the mileage of the vehicle. The modifying number ranges from .0 to 1.0. If no structural damage to the vehicle, the 10% of NADA value is multiplied by .0 which results in 0 diminished values.
1) Can you define the vehicle structural damage?
2) Does the 17c formula only apply to the vehicle structure damage? For example, the damage is on the bumper of a new vehicle. The bumper needs to be replaced after an accident. Will the vehicle lose the market value after the replacement of the bumper? Can you explain it? I need to reply to my insurance. Thank you for your answer.
ANSWER: Structural damage, while serious, is not the only thing that triggers a loss of value. Repainting a car, even only a few panels, are cause for DV.
The 17c formula was devised to codify diminished value claims in Georgia, where everyone gets DV settlements regardless of who was at fault. However, the 17c formula has been overturned in courts many times. Nevertheless, insurers outside the Georgia jurisdiction like to rely on 17c to calculate diminished value. But the only definitive measure of DV losses is to sell the car to the highest bidder with full disclosure of the damage, at which point one deducts the net proceeds of the sale from the pre-loss book value to arrive at a hard figure.
If only the bumper cover requires replacement and their is no other refinishing or body repairs required, the value of the vehicle will still take a hit. This is because the auto makers do not paint bumper covers, but the color is molded into the material in a way the provides the most durable finish possible. A painted bumper cover, on the other hand, is far less durable and is subject to the highest failure rate in the auto refinishing business. A painted bumper cover will tend to crack and peel, depending on how well the paint was applied.
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QUESTION: Buyers will unlikely pay the used vehicle same price with bumper repaired or replaced before comparing with the same vehicle without accident record. Everyone will probably agree. Thus the repaired vehicle has lost value after the accident. I am talking the DV in Georgia. The insurance argues the bumper damage is not structure damage. The modifying number on the formula 17c is 0. Thus, there is no DV can be accessed and rewarded. Does it make sense and how I should refute?
ANSWER: I am unsure of the regulations that control DV claims in Georgia. However, there must be an appeals process or a way to resolve disputes. If so, tell them that you will sell your car with full disclosure of the damage history to prove the loss of value.
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QUESTION: Thanks for reply. But, I still do not know your direct answer to the question whether the 17c formula is only dealing with the vehicle structure damage or not. What is your opinion on the 17c formula? Is it only dealing with the vehicle structure damage or not? Can you provide your openion and explain why?
AnswerAccording the rules governing the application of the 17c formula, this is how it is applied:
MODIFIER EXTENT OF DAMAGE
1.0 Severe damage to the structure of vehicle.
0.75 Major damage to structure and panels.
0.50 Moderate damage to structure and panels.
0.25 Minor damage to structure of vehicles.
0.0 No structural damage and replaced panels.
If you go by the rules, you have no basis for a DV claim from an insurer in your state. That is, no structural damage, no loss of value. However, you do have the right to sue for the loss if you can substantiate it.
I feel the 17c formula was devised by the insurers to resolve the DV claims quickly and without negotiation, which would cost them more time and money. I do not feel it is accurate, however, as many cars will lose more value than it allows.
