Diminished value claims in Virginia

Claims against the at-fault driver

In Averett v. Shircliff (1977), the Supreme Court of Virginia adopted as "the rule in Virginia" that damage to a motor vehicle is measured by the difference in its market value immediately before and immediately after the damage. When the car can be restored to its former condition by repairs, the measure is the reasonable cost of repairs, with reasonable allowance for depreciation.

The court left it to the jury, based on the evidence, to decide which of the two measures fits the case. Evidence of the car's value before the crash and after the repair is what lets a jury see the depreciation that repair did not remove.

Claims under your own policy

Under your own collision coverage, the policy's wording sets what is paid. In Bickel v. Nationwide (1965), the Supreme Court of Appeals of Virginia read a policy that capped payment at the cost to repair or replace the car with property of like kind and quality, and held that for a repairable car the payment was the repair cost.

When another driver caused the crash, Virginia's claims rules say that where liability is reasonably clear, that driver's insurer may not recommend that you claim under your own policy solely to avoid paying the claim (14VAC5-400-80(A)). A claim against the at-fault driver's insurer follows the Averett rule above.

Filing deadline

Virginia gives five years to bring an action for injury to property (Va. Code 8.01-243(B)).

The five years start on the date the damage is sustained, not on the date the lost value is discovered (Va. Code 8.01-230). That is the deadline for filing suit. A Virginia attorney can confirm how it applies to your dates.

How diminished value claims tend to go in Virginia

Virginia's claims rules require an insurer to acknowledge a claim within 15 calendar days (14VAC5-400-50). On a claim under your own policy, it must accept or deny within 15 calendar days of a completed proof of loss, and send a written status notice every 45 days while it is still investigating (14VAC5-400-60).

For auto claims, an insurer's repair estimate must be an amount for which the damage can reasonably be expected to be satisfactorily repaired, any betterment or depreciation reduction must be documented in the claim file, and a car repaired at a shop the insurer designates must be restored to its condition before the loss at no added cost (14VAC5-400-80).

An insured who sues their own insurer over coverage or payment can recover court costs and reasonable attorney fees if the court finds the insurer was not acting in good faith when it denied coverage or refused payment (Va. Code 38.2-209).

Many insurers answer a diminished value request with a formula rather than a market study. The best known is the 17c formula, which came out of the Georgia class actions over first-party claims that followed State Farm v. Mabry; its name comes from paragraph 17(c) of an injunction in one of them. It starts from a capped share of the car's value before the crash, then reduces it with damage and mileage modifiers. A law-firm survey notes it was built for that class action and has not been formally adopted for general use.

Adjusters commonly ask for proof that the repaired car is worth less, not only proof that it was damaged. Records that tend to matter: the final repair invoice and photos, the estimate showing any structural or frame work, the vehicle history report entry, and written market evidence such as dealer quotes or listings for the same car with and without an accident history.

Lost value is easiest to show once repairs are finished, because the value after repair is what gets compared with the value before the crash.

If you have a complaint about claim handling

Virginia's Bureau of Insurance takes complaints about how an insurer handled a claim through its online complaint portal, or by mail or fax. It does not take complaints by phone or email. File with the Virginia Bureau of Insurance.

Next steps

• How Reclaim's diminished-value check works
• Estimate a figure with the diminished value calculator
• How to file a diminished value claim
• Diminished value claims in Maryland
• Diminished value claims in North Carolina
• Diminished value rules in every state