Diminished Value | A Hidden, Recoverable Insurance Claim

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Article written by Expert Appraisal Group owner, Theron Williams, for the Escapees RV Club. The Escapees RV Club is a nationwide RV community based in Livingston, Texas.

Prerequisites to Qualify for Diminished Value
1. You must not be at fault in the accident and seek diminished value under the responsible parties’ insurance carrier.

2. You can seek diminished value under your own policy in certain instances, such as with “Uninsured” or “Underinsured Motorist” coverage. (This is state-specific, so please read your policy.)

3. The RV or automobile is repairable.

4. The owner of the automobile or RV is the party who is requesting diminished value.

Diminished Value
One covered loss to your RV or automobile that the insurance company is not required to notify you about is diminished value. Diminished value is the difference between what your RV or automobile was worth before the accident and what it is worth now after it has been repaired. An accident can negatively affect the actual cash value of an RV the same as it would to an automobile. In certain instances, a potential buyer may not purchase an RV simply because it has been involved in a prior loss, even though it has been repaired properly.

There are several factors involved when determining whether an RV has sustained any diminished value. Just as in purchasing an automobile, you would look at the year, make, model, condition, estimate of repair and any previous losses. All these factors are taken into consideration when evaluating whether an RV has inherent diminished value. The RV’s age and the severity of the damages are the main aspects. An automobile experiences depreciation regularly, and so does an RV. As an RV ages, it experiences normal depreciation and wear and tear from everyday driving. Diminished value potential decreases as the vehicle ages to the point where it is nonexistent.

The law does not require the insurance companies to tell you about your right to pursue a diminished-value claim with them. However, they are required to make you whole again and that may involve their compensating you for the loss in value of your RV. This varies from state to state, and there are several prerequisites to qualify for diminished value (see sidebar).

Diminished value is a subjective loss, and not every RV or automobile will qualify. All these factors must be evaluated. Then, a professional opinion must be obtained, verifying that the accident negatively affected the value of the damaged vehicle. If the answer is yes, and the RV or automobile does have diminished value, the next question is how much?

Diminished Value Appraisal
A professional appraiser will not apply any simple formulas to calculate diminished value. First, they will determine the actual cash value of the vehicle before the accident to calculate a base price. Then, they will conduct a forensic review of the estimate and any damage photos provided. Appropriate weighting will be given to the extent of the damages. For instance, frame, structural and safety systems will carry heavy weighting, since potential buyers will often not consider purchasing an RV or automobile that has sustained these types of damages. The appraiser will then use their professional opinion to determine what, if any, is the diminished value.

The most important thing is to consult a professional appraiser to receive a free initial consultation regarding diminished value. A normal diminished value report will run between $300 to $500, depending on the appraisal service you hire. It is well worth the cost to ensure that you are getting a fair and equitable amount for the loss in value of your RV or automobile.

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