I had occasion to speak to a claims representative from State Farm Insurance Company. The St. Lucie Appraisal Company had prepared an auto diminished value appraisal for a client for whom we were attempting to negotiate a fair settlement amount. During our conversation she informed me that State Farm has made the decision to deny EVERY third-party automobile diminished value claim in at least the seven states she handles. This could be a nationwide tactic; only time will tell. NOTE: Since publishing this article, State Farm’s representative informed me that instead of “denying” all third-party diminished value claims, they will “vigorously fight” them making it a virtual certainty that you’ll need to litigate. Does this mean you can’t recoup the lost value your car suffers after accident repairs when the at-fault driver is insured by State Farm? Even though State Farm’s policy clearly shows that the property damage portion agrees to cover all losses caused by their insured? The short answer is this. If the insurer actually implements this strategy, all auto diminished value claims would be summarily denied and you will be forced to sue the owner of the car that caused the accident. There would no longer be negotiations between your appraiser and the insurance company. State Farm would simply force you into litigation if you want to collect what is rightfully yours.
HOW IMPORTANT IS IT TO OBTAIN A QUALITY AUTO DIMINISHED VALUE APPRAISAL?
The quality of your automobile diminished value appraisal now becomes a more critical factor than before. Insurance companies have always been able to differentiate between a comprehensive diminished value appraisal where actual research was done and a computerized formula or algorithm-based version.
State Farm is the largest property and casualty insurance provider in the United States. It is also the largest auto insurance provider in the United States. State Farm is ranked 36th in the 2019 Fortune 500, which lists American companies by revenue. State Farm relies on captive agents to sell insurance. Only State Farm agents can sell State Farm insurance, and their agents can sell only State Farm products.
In 1993, Todd Hindin filed a lawsuit against State Farm for allegedly keeping a list of prominent Jewish lawyers referred to within State Farm as the “Jewish Lawyers List”. Any claims made by clients of these attorneys were automatically forwarded to State Farm’s fraud unit, purely on the basis of the religion and national origin of the lawyers. These claims would then be neither settled nor paid. State Farm initially claimed that this was not a matter of discrimination, but of coincidence. However, Dr. Frank Taylor (an experienced economist on retainer for the Appellants) discovered that despite the fact that the population of the states involved had Jewish populations between 2-5% of the total population, the list was composed of nearly 80% religiously or ethnically Jewish lawyers. Individuals who had worked for State Farm, including former Divisional Claim Superintendent Ron Middler, testified that the list was indeed used to discriminate against ethnic minorities. State Farm paid out $30 million to Todd Hindin and his clients for discrimination on the basis of religion and national origin.
Another case in 2003, Campbell v. State Farm, in which State Farm had to pay out $145 million in punitive damages (later reduced by the U.S. Supreme Court) after acting in bad-faith. State Farm had refused to pay damages to the families of two individuals who were victims in a car accident that Campbell was responsible for, despite originally informing Campbell and his family “that their assets were safe, that they had no liability for the accident, that [State Farm] would represent their interests, and that they did not need to procure separate counsel.”
In matters of Third-Party Inherent Auto Diminished Value cases, State Farm has consistently demonstrated an unwillingness to offer fair compensation to claimants. I was recently deposed and provided expert witness testimony in an automobile diminished value case in Palm Beach, FL Circuit Civil Court, which resulted in State Farm suffering a huge financial loss for an auto diminished value case. A $40,000.00 judgement for the plaintiff plus reimbursement of all the plaintiff’s costs including our appraisal, deposition and expert witness fees, her attorney fees as well as the insurer’s own costs which included outside counsel and expert witnesses. While it was a great victory for our client, it took a good deal of resolve on her part as the claim dragged on for more than two years. While it may have ultimately cost the insurance company close to one hundred-thousand dollars, they still come out with a net profit. If ninety out of every hundred diminished value claimants walks away with a paltry sum or nothing at all, insurers are willing to suffer a few big losses as the cost of doing business.
THERE IS A DIFFERENCE BETWEEN GOOD AND BAD AUTO DIMINISHED VALUE APPRAISALS
A diminished value appraisal prepared by The St. Lucie Appraisal Company includes extensive research with numerous unbiased experts in the field of automobile valuations. Their conclusions, as well as all contact information for verification purposes are clearly shown. The insurance company’s appraiser and expert witness’ report was one of the formula-based kind, derived from the now infamous Rule 17C. The jurors in the automobile diminished value case instantly recognized the validity of our appraisal which was relevant to their entering their judgement for our client. The insurance company didn’t even bother to introduce their expert’s appraisal or testimony.
Whether or not you are employing an attorney and regardless if your case is in small claims or civil court, it is your responsibility to prove that your vehicle’s value has diminished and by how much. The first step you take, obtaining a persuasive automobile diminished value appraisal is crucial. It is the foundation upon which your case will be built. If State Farm decides to continue down this path, they will happily stay the course until more car owners move forward with lawsuits that hand them multiple losses in court.
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