The Conundrums of Gap Insurance and Diminution of Value

The lexicons of Personal Injury and Property Damage litigation have, in recent years, been expanded to include the titled subjects of this article.  At our firm, we encourage our clients who have asked our help from auto accident losses, to look at their policies to see if they have Gap insurance. Simply stated, when car payments still remain on a car which has been deemed a total loss, often this amount falls short of satisfying the outstanding payments.  The carrier for the liable party is only responsible for either the cost of the repairs or the book value of the car if the repairs exceed the book value.  The victim, plaintiff, can then look to his or her Gap policy to cover the remaining payments.  This insurance should always be purchased from one’s carrier when financing.  It should not be purchased from the dealer, as it will be more expensive. Often times, these remaining payments can be quite high, and the policy holder will be most grateful for their Gap insurance, which can be purchased for just a few hundred dollars.

A Diminution of Value claim can be made against the liable party’s carrier, after the car has been repaired.  Although the car may run as well as ever and may look as good as ever, it now has an accident history which will reduce its resale value. This is a new claim recognized in every state.  It is begrudgingly paid by the liable carrier.  It usually takes the help of counsel.  At our firm we first have a diminished value appraisal done by a collision expert.  Cost is usually in the $400 range.  If the vehicle is worth less than $5000 total, a Diminution of Value claim is not worth the exercise in fighting the insured. Said carrier will have their own appraisal, usually showing far less than ours.  So it’s important to have counsel to negotiate a fair settlement, and to file suit if a compromise cannot be reached. Remember that a car in a crash will always be worth thousands less because of the computer filed crash history.

Our firm is a full service firm and we leave no stone unturned in our pursuit of our client’s rights.  We encourage all clients to purchase Gap insurance if they are financing their vehicle and have put less than 20% down. And we will always seek a Diminution of Value claim on any repaired auto which still has substantial value.  Our fees are a modest percentage of the recovery, requiring no other counsel fees.

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