Diminished value, also known as loss of value or Diminution in value or DV, is the difference in the fair market value of a vehicle without a crash history and the fair market value of the same vehicle with an accident/crash history. In most situations if a car has been in a severe accident previously it lowers or depreciates the value of the vehicle. Loss of value or diminished value is thus basically the difference of what your car was worth pre-crash and then post-crash.
Diminished value is not something that your automobile insurance company will normally have to pay out in Texas. Your own car insurance policy likely has what lawyers refer to as "plain and unambiguous language" which does not require your own car insurance company to make payments for diminished market value of your vehicle when it has been adequately repaired.
Your policy's "limits of liability" section likely states that your insurance provider's liability is limited to the damaged vehicle's actual cash value (ACV) or the amount needed to repair or replace the vehicle (whichever is less) or possibly even an agreed upon amount (normally for specialty or classic cars).
The Department of Insurance (TDI) says that is that an insurer is not obligated to pay a first party claimant for diminished value when the vehicle in question is completely repaired to its pre-damage condition. The language of a TX car insurance policy does not require payment for, or refer to, diminished value and court cases in Texas involving this issue agree that normally your own insurance company does not have to pay out for diminished value.
The TDI's position on diminished value should not be used as a measure to settle other disputes with your car insurance company they note. For instance, if your vehicle was repaired properly by a body shop but your car still does not function as it did before the accident, you and your auto insurance company may agree to use loss of the vehicle's market value as a way to measure the damages and to settle the dispute.
If you are making a claim for your vehicle with the car insurance company of an at-fault driver, a third party claim, you may be able to ask for diminished value in Texas. The TDI say that you do not have an insurance contract with this insurance provider so it doesn't preclude you from making this type of claim. As a third party claimant against a car insurance company you may find that the car insurance company you are working with may be obligated to pay you for any loss of market value of your car, regardless of the completeness of the repair.
If you are trying to make a third party claim for diminished value to your vehicle, you can contact the TDI for more information about what your consumer rights are.
As for the percentage at which a car is determined to be a totaled, it varies from insurance company to insurance company. The Texas Department of Insurance states that a vehicle can be totaled if the cost of repair exceeds the vehicle's actual cash value (ACV), or exceeds the insurance company's measure to declare a total loss.
Each insurance company in TX is permitted to establish a percentage of damage in comparison to the ACV of a vehicle. If the measurable damage, from hail damage, an accident, etc., meets or exceeds the set percentage the company will automatically declare a total loss.
Texas law defines a vehicle to be salvaged at the point when the damages exceed the ACV of the vehicle however the state does allow car insurance companies to total out a car before the costs of repairs exceeds the value of the vehicle. It is thus left up to the discretion of auto insurance companies to determine when a car is a total loss. Insurance companies will total out a car usually when it costs anywhere between 50% and 100% of the car's value to repair it.
Typically an insurance company will total out a car when it is not economic to repair the car, around when the costs are 75% or more of the value of the vehicle. The cost of repairs is not the only thing looked at there is the cost of storage, rental car costs, etc. and if these costs make it uneconomical for the car insurance company to repair the car they will find it to be a total loss.
Sometimes the insurance company may want to total your car, but you would prefer to have it repaired instead. You usually can keep your car if you are willing to subtract its salvage value from the insurance settlement. The TDI warns consumers to make sure the cost to repair the car will not exceed the car's actual cash value since you are now responsible for the repairs to the car and paying more for these than the car is worth may be a losing proposition for you. To find out the salvage value, contact local salvage yards for estimates the TDI suggests.
If you want to know more about the laws of Texas related to insurance claims and the totaling out of a vehicle, you should contact consumer division of the Texas Department of Insurance directly. If you want to know about how your specific insurance provider's calculates a car to be a total loss (what their percentage of damage is in relation to the car's ACV) contact your insurance agent. Or if you vehicle was damaged by another party and they are going to declare it a total loss, ask the insurance adjuster on your claim how they determine a car to be totaled out.
When shopping for Texas car insurance, let us help you out. CarInsurance.com is an Online Insurance Marketplace™ gives consumers the opportunity to shop and compare insurance companies online. We offer the ability to shop for car insurance online and the ability to purchase your policy directly through CarInsurance.com, so get started with instant car insurance quotes for TX.