Diminished Value Question- Geico

by Allie
(Houston, TX)

I live in Texas and incurred damages to my 2006 Toyota Avalon XLS in the parking lot of Wal-Mart. I was in the store and, therefore, had no information on the vehicle causing $3300 in damage to my car.

The car was a certified pre-owned vehicle without any accident on its record. Since the repairs were made under my uninsured motorist coverage, can I file a diminished value claim with Geico?

Answer:

Hello Allie,

Well, you have a very interesting situation. Texas does not allow for first party diminution of value (or diminished value). See the court decisions below. However, you are seeking coverage under the uninsured motorist coverage, which acts as a third party. It is very likely that you can make this claim. please see our page on diminished value here: http://www.auto-insurance-claim-advice.com/diminished-value-claim.html

In Carlton v. Trinity Universal Ins. Co., 32 S.W.3d 454 (Tex. App. - Houston 14th Dist. 2000), the court held:


“Where an insurer has fully, completely, and adequately ‘repaired or replaced the property
with other of like kind and quality’ any reduction in market value of the vehicle due to factors that are not subject to repair or replacement cannot be deemed a component part of the cost of repair or replacement.”

Also, in Smither v. Progressive County Mutual Ins. Co., 76 S.W.3d 719 (Tex. App. - Houston 14th Dist. 2002), the court refused to allow recovery of diminution of value. In American Manufacturers Mutual Ins. Co. v. Schaefer, 124 S.W.3d 154 (Tex. 2003), the Texas Supreme Court held that:

“The actual market value of the vehicle before injury may be considerably less than the cost
of repairs plus the loss of market value; or the actual market value may be more than the
cost of repairs plus the loss of market value.”
The Supreme Court refused to rewrite the Insurance contract and held:

“AMM elected to repair the damaged vehicle and Schaefer does not contend that the repairs were faulty, incomplete or inadequate. If he did, then the insurer might be liable for breaching its obligations under the policy's terms. But Schaefer would still only be entitled to the remedies outlined in the policy, which do not include compensation for a fully repaired
vehicle's diminished market value. We acknowledge that Schaefer's repaired vehicle may
command a smaller sum in the market than a like vehicle that has never been damaged,
and that awarding Schaefer diminished value in addition to repair would go further to make
him whole. But we may neither rewrite the parties' contract nor add to its language. See
Royal Indemnity Co. v. Marshall, 388 S.W.2d 176, 181 (Tex. 1965).”

The Texas Department of Insurance Bulletin B-0027-00 (2000) states:

“The position of the Department is that an insurer is not obligated to pay a first party
claimant for diminished value when an automobile is completely repaired to its pre-damage
condition. The language of the insurance policy does not require payment for, or refer to,
diminished value.”

Good Luck,
http://www.auto-insurance-claim-advice.com