part 2 diminished value
Photograph Courtesy Mercedes-BenzBut What If You Have Collector Car Insurance?
“Not all insurance companies resist diminished value claims on collectible cars,” says Paul Morrissette, senior vice president at Chubb Insurance, a firm that specializes in collector car coverage˙
Like most other collector car insurers, Chubb has damaged vehicles repaired using a shop and materials approved by the client. “Furthermore,” he adds, “choosing a qualified repair facility is the best way to preserve the value of a special car, even if it means sending their vehicle out of state, to another country, or back to the manufacturer.”
Some final advice from Morrissette: “Because successful collectors are worried about preserving their investment, owners of unrestored, original cars may wish to consider diminished value coverage.”
If the owner of the damaged car has purchased diminished value coverage, he explains, Chubb will work with the client to determine if the value of the car has been impacted by the incident. If the market value of the vehicle after the repair is lower than the amount of coverage prior to the loss, Chubb will pay the difference.
Here’s how Bressler proceeds with a claim: “After the car is repaired, usually I start by hiring a professional appraiser to write me an opinion. And I use people who have experience and credentials, because if we can’t settle with an insurance company and do go to court, this person will act as an expert witness. I use their report on diminished value to prepare a detailed demand package, which I submit to the insurance company to negotiate a settlement.”
Typically, he says, the insurer counters. “It’s almost always a fight. Very rarely do they pay exactly what I requested.” He mentions two exceptions: “If it’s a brand-new car and the demand is reasonable, I generally get it, as well as when the diminished value claim exceeds the policy’s maximum liability limits.” About 20 percent of his claims end up in litigation.
When prospective buyers check an auto’s vehicle history report, Bressler believes that most lose interest when they spot air bag deployment. “In my opinion,” he says, “that’s the death knell for the resale value of the vehicle. Air bag deployment indicates a major accident, and I don’t think that consumers trust that an air bag system has the same integrity when it’s installed by a body shop as it does when installed by the factory. And when people question the safety of a vehicle, that’s when the greatest diminished value occurs.”
While he’s not exactly a gearhead, Bressler has learned that people become very involved with their cars. “They love them,” he says (this from a man whose second car is a Honda Civic showing 225K miles). But emotions aside, he understands and conveys to clients the importance of being objective about a diminished value claim, even when it involves a cherished and valuable ride.
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No Clean Vehicle History Report, No Sale?
Carfax and AutoCheck, the nation’s largest vehicle history report providers, buy their data from a variety of sources (Carfax alone claims 100,000 sources and a database of 15-billion records), including police departments, fire departments, insurance companies (some, not all), vehicle auctions, DMV agencies, car dealerships, collision repair shops, car rental companies, and replacement parts suppliers
Each vehicle history report (VHR) lists items such as title transfers (number of owners), title history (salvage/reconstructed/flood/the), vehicle use, odometer readings, air bag deployment, open recalls, lemon history, state emission inspections, and dealer service records
Any VHR is only as good as the data supplied, and reporting gaps exist Not all police departments and DMV centers report promptly (small town precincts are notoriously slow), sometimes causing time lags So a purchaser may buy a car with a clean VHR, only to find an accident report on it six months later Not all accidents, like single car versus tree scenarios or late night ditch excursions, are reported, nor are the ensuing repairs Not all body shops and dealerships share their data, and the ones that do may vary in depth of repair details
Carfax says it gets to million records a day, so entering and coding repairs (think human error) sometimes causes problems as well We talked to an authorized Porsche/Audi/Mercedes body repair shop near Orlando, and they cited some examples “Undercarriage damage” was found to be a bent tailpipe A malfunctioning engine warning light somehow translated to “engine fire” In one case, an obviously repaired Mercedes with a clean Carfax was found to be carrying a salvage title in another state.
A Florida Porsche dealership discovered some similar reporting quirks A routine service turned up on a Carfax as “replaced engine”. And when replacing a reluctant horn on a 911 required removing the bumper cover to access it, the service was coded “bumper replaced,” which implied accident damage. This dealership has also discovered VHRs with grossly inaccurate odometer readings Once an entry is listed on a VHR report, it is extremely difficult to have removed, with the burden of proof on the owner.
While a VHR can be a useful tool for prospective buyers, it shouldn’t be the only one A typical disclaimer reads: “Carfax depends on its sources for the accuracy and reliability of its information Therefore, no responsibility is assumed by Carfax or its agents for errors or omissions in this report.”
Nothing beats an up close and personal inspection by an expert, preferably on a li If a car you’re considering lives three states away, hire a professional appraiser. It’s an up-front investment, sure, but one that can end up saving you money. Consider it insurance.