An insurance company’s denial of a diminished value claim—or its decision to make only a nominal offer—does not necessarily mean the claim has no value.

Increasingly, insurers take the position that a vehicle has been restored to its pre-accident value simply because the vehicle was properly repaired. Under this theory, once the physical damage has been repaired, there is no remaining loss in value.

Connecticut case law does not support such a blanket proposition. In Littlejohn v. Elionsky, 130 Conn. 541 (1944), the Connecticut Supreme Court recognized that a vehicle may be repaired to a sound or good condition and nevertheless be worth substantially less than it was before the collision. As the Court explained, “[a] new car may be badly damaged and be repaired so as to put it in a sound or good state, and yet be worth much less than before the collision.” Id. at 543; see also Maher v. Cunningham, 2013 WL 1715467 (Conn. Super. Ct. Mar. 26, 2013) (Blue, J.) (Memorandum of Decision Re: Motion for Summary Judgment).

The following case illustrates how a careful investigation, supported by expert evidence and effective negotiation, can turn an initially denied diminished value claim into a substantially larger recovery.

The Vehicle

Our client owned a 2020 Lincoln Corsair with approximately 53,000 miles. Before the accident, the vehicle had never been involved in a prior collision and was in excellent condition.

The accident caused substantial damage to the rear passenger side of the vehicle but no no frame damage. The vehicle was subsequently repaired by a reputable repair facility where the repairs were completed.

Nevertheless, the vehicle now had an accident history—an important factor when determining its market value. The collision history would be reflected in vehicle-history reporting services such as Carfax and could affect the vehicle’s resale value even after the physical damage had been repaired.

The Insurance Company’s Position

Before our office became involved, the client attempted to resolve the diminished value claim directly with the insurance company.
The insurer took the position that because the vehicle had been repaired, it had been restored to substantially the same condition and value it had before the accident. Based on that position, the insurer initially declined to make any payment for diminished value.

Our Investigation and Presentation

Once our office was retained, we immediately began investigating the claim and retained an independent diminished value appraiser.

The appraiser concluded that the vehicle had sustained $6,880 in diminished value as a result of the collision and resulting accident history.

We then prepared a detailed demand supported by the available evidence, including the expert appraisal and documentation concerning the accident, the vehicle, and the resulting loss in value.

Our investigation also uncovered evidence indicating that the defendant driver may have been intoxicated at the time of the collision even though he was not arrested for DUI. That evidence was significant because, depending on the facts and applicable law, reckless or intoxicated driving may have implications for the damages available to an injured party. See, e.g., Conn. Gen. Stat. § 14-295.

The combination of the diminished value evidence and the additional facts concerning the defendant’s conduct substantially increased the potential exposure associated with the claim.

The Result

The insurance company initially offered $3,500 to resolve the claim.

We did not accept the offer.

Instead, we continued preparing the case for litigation, including preparing a lawsuit and arranging for service on the defendant. We also made clear that we were prepared to pursue discovery, including examining the circumstances surrounding the defendant’s conduct at the time of the accident.

Ultimately, before suit was filed, the insurance company agreed to resolve the claim for $18,000, nearly three times the amount of our expert’s $6,880 diminished value appraisal.

Bonus Money: Loss of Use

The diminished value claim was not the only component of the client’s damages.

We also pursued a claim for loss of use, which generally refers to the value associated with being deprived of the use of a vehicle for a period of time.

When an insurer provides a rental vehicle during the repair period, the rental may address some or all of the loss of use damages depending on the circumstances. In this case, our client had been provided with a rental vehicle, but not a comparable one. Thus, we were able to pursue additional compensation for the loss of use of the vehicle. It wasn’t much, but here at D’Amico Law, we believe every dollar counts.

What This Case Demonstrates

Diminished value claims can be difficult to evaluate because the vehicle may look substantially the same after repairs as it did before the accident.

But physical repair and market value are not necessarily the same thing.

A vehicle with a significant accident history may be worth less to a prospective buyer than an otherwise identical vehicle that has never been involved in a collision. The fact that the vehicle was repaired does not necessarily eliminate that difference in value.

Insurance companies may also obtain their own diminished value assessments, which can produce substantially lower valuations than an appraisal obtained by the vehicle owner. When that happens, the competing evidence must be evaluated carefully and, when appropriate, challenged through negotiation or litigation.

The goal should be to present a well-supported claim that gives the insurer a legitimate reason to reconsider its initial position while also demonstrating that the claimant is prepared to pursue the matter in court if a reasonable resolution cannot be reached.

In this case, the initial position was that the claim was worth $0.

The next settlement offer was $3,500.

The final settlement was $18,000.

The difference was not simply persistence. It was the result of our reputation, developing the evidence, obtaining an independent expert valuation, identifying additional potential sources of recovery, and demonstrating a willingness to litigate when necessary.

This article is provided for informational purposes only and does not constitute legal advice. The outcome described above is based on the particular facts and circumstances of that matter. Results in individual cases vary, and past results do not guarantee a similar outcome in future cases.