Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for advice specific to your situation.
Detailed Answer
What Is Diminished Value?
Diminished value represents the loss in your vehicle’s market value after it sustains damage and undergoes repairs. Even when you restore your car to its pre-accident condition, buyers often pay less for a previously damaged vehicle.
Texas Law on Diminished Value Claims
In Texas, you can pursue a first-party diminished value claim under your own collision or comprehensive policy. If you lack collision coverage, you may seek a third-party claim against the at-fault driver’s insurer. Note that Texas courts recognize third-party diminished value claims only in certain jurisdictions (Bexar, Dallas, Ector, Lubbock, Midland, Tarrant, and Travis Counties).
Insurers must follow prompt payment rules under Texas Insurance Code §542.058, which requires them to accept or deny a claim within 15 business days after receiving sufficient information: Tex. Ins. Code §542.058. Unfair settlement practices—such as undervaluing or unreasonably delaying payment—violate Texas Insurance Code §541.060: Tex. Ins. Code §541.060.
Step-by-Step Guide to Filing
- Review Your Policy. Confirm you have collision or comprehensive coverage. Note your deductibles and claim procedures.
- Gather Evidence. Document pre-accident value with Kelley Blue Book or NADA guides. Take photos of the damage and repairs. Obtain repair invoices and any Carfax or vehicle history reports.
- Order an Independent Appraisal. Hire a qualified appraiser to calculate your vehicle’s diminished value. Ensure the report outlines methods and comparables.
- Draft a Demand Letter. State your claim number, policy details, accident date, and attach all documentation: appraisal, photos, repair bills, market values.
- Submit Your Claim. Send the demand letter and attachments to your insurer’s claims department by certified mail or through its online portal. Retain proof of delivery.
- Follow Up Promptly. Track deadlines under Tex. Ins. Code §542.058. If you receive a denial or lowball offer, request a written explanation.
- Negotiate or Escalate. Respond to counteroffers with supporting data. If negotiation stalls, file a complaint with the Texas Department of Insurance or consider small-claims court (up to $20,000).
Helpful Hints
- Keep a detailed log of communication—dates, names, and summaries.
- Obtain at least two independent appraisals to strengthen your position.
- Understand your policy’s appraisal clause; some insurers require appraisal arbitration.
- Check local court rulings if pursuing a third-party claim in a county that recognizes diminished value.
- Review the insurer’s claim-handling guidelines on the Texas Department of Insurance website.
- If you feel the insurer acted in bad faith, consult a Texas attorney experienced in insurance disputes.