Yes. Auto diminished value (DV) claim denials are extremely common across the insurance industry—and they are largely systemic, not case-specific. Here’s how and why it happens.
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1. DV denials are the default position, not the exception
Most insurers are trained to:
• Not mention diminished value unless the claimant raises it
• Deny or minimize DV on first presentation
• Offer token settlements ($0–$500) regardless of vehicle value
This occurs even in states where DV is clearly recognized.
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2. The most common denial reasons (and what they really mean)
“Your vehicle was fully repaired”
• Reality: Proper repairs do not eliminate market stigma
• Courts routinely recognize that repaired vehicles sell for less
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“We don’t pay diminished value”
• Reality: Insurers don’t get to opt out of tort law
• In third-party claims, policy language does not control
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“There’s no proof of diminished value”
• This is the only legitimate objection
• It shifts the burden to the vehicle owner to produce evidence
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“Our internal formula shows no DV”
• Internal formulas (like 17c) are:
o Not market-based
o Not court-mandated in most states
o Designed to minimize payouts
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“The vehicle is too old / too many miles”
• Age and mileage affect amount, not existence
• Even older vehicles can suffer DV after structural or panel damage
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3. Why insurers deny DV so consistently
Economic reality
• Paying DV would increase claim severity across millions of claims
• Even small average DV payouts would cost insurers billions annually
Strategic leverage
• Many claimants:
o Don’t know DV exists
o Won’t push back
o Won’t hire experts
o Won’t litigate
Denial works because it often succeeds.
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4. What actually changes the outcome
DV claims typically turn when one or more of the following happens:
• A professional diminished value appraisal is submitted
• The claim is escalated beyond the front-line adjuster
• A demand letter references case law and tort principles
• The insurer faces credible litigation risk
Insurers pay DV when denying becomes more expensive than settling.
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5. Denials vs. lowball offers (important distinction)
Many “denials” are actually:
• Constructive denials via nuisance offers
• Meant to test whether the claimant will push further
Example:
• Independent Appraisal shows $6,500 DV
• Insurer offers $500
• Not a good-faith valuation—it’s a pressure tactic
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6. Industry-wide pattern, not company-specific
This applies to:
• State Farm
• GEICO
• Progressive
• Allstate
• USAA
• Regional carriers
Different branding—same DV playbook.
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Bottom line
Yes—DV claim denials are common by design.
They persist because:
• The law allows DV recovery
• The burden of proof is on the owner
• Most owners never push far enough
When owners do present credible evidence and stay persistent, DV claims are often paid—sometimes only after negotiation or court involvement.
PROVIDING THE INSURER WITH CREDIBLE PROOF OF DIMINISHED VALUE IS IMPORTANT. THERE ARE SIX METHODS BY WHICH DIMINISHED VALUE IS DETERMINED. WHICH IS BEST?
1) THE APPRAISER’S OPINION OF THE VEHICLE’S LOSS IN VALUE IS SUPPORTED BY THE UNBIASED OPINIONS OF SIX SALES MANAGERS AT NEW CAR DEALERSHIPS
2) USE OF FORMULAS SUCH AS RULE 17C
3) USE OF ALGORITHMS WHICH ARE BASED ON FORMULAS
4) USE OF ONLINE ASKING PRICES
5) USE OF PRICE DIFFERENCES IN BOOK VALUE CONDITION PAGES
6) ACCESSING AUCTION RESULTS
Short answer: Method #1 is the strongest and most defensible.
Long answer below—ranked from best to weakest based on how insurers, judges, and real markets actually work.
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🥇 1) Appraiser’s opinion supported by unbiased dealer sales managers
BEST METHOD
Why it wins
• Reflects real market behavior
• Dealers are the actual buyers and sellers who discount vehicles for accident history
• Multiple independent sources = corroboration
• Aligns with how courts define fair market value and trade-in value
Strengths
• Human market participants, not abstractions
• Not insurer-created
• Easily explained to judges and juries
• Survives cross-examination
• Accepted repeatedly in litigation and arbitration
Weakness
• Requires effort, experience, and documentation
This is the gold standard.
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🥈 2) Accessing auction results
MODERATE (Wholesale Market Evidence)
Why it works
• Auctions show actual completed transactions
• Accident disclosures are mandatory
• Clean vs damaged deltas are visible and provable
Strengths
• Objective
• Verifiable
• Defensible in court
Limitations
• Wholesale market vs. fair market value or trade-in market
• Requires proper filtering (mileage, trim, condition)
Moderate supporting evidence, slightly weaker than dealer-retail input.
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🥉 3) Online asking prices
MODERATE (Needs Care)
Why it helps
• Shows how the market attempts to price vehicles
• Clean vs accident listings show stigma
Problems
• Asking price vs. actual selling price
• Sellers often inflate numbers
• Requires statistical discipline to avoid cherry-picking
Useful only when properly normalized and supported.
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⚠️ 4) Book value condition-page differences
WEAK TO MODERATE
Why it’s limited
• Condition adjustments are not accident-history penalties
• Books were never designed to measure DV
• Insurers often control or influence valuation services
Courts’ view
• Helpful context, not determinative
• Easily attacked on cross-examination
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❌ 5) Algorithms based on formulas
POOR
Why insurers love them
• Repeatable
• Predictably low
• Non-transparent
Why courts don’t
• No market validation
• No human judgment
• Often proprietary and untestable
Algorithms without real transactions = assumptions stacked on assumptions.
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❌ 6) Formulas such as Rule 17c
WORST METHOD
Fatal flaws
• Created by an insurance company
• Not based on market data
• Arbitrary caps
• Rejected or criticized by many courts
17c measures insurer comfort, not market loss.
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📊 Overall Ranking (Best → Worst)
Rank Method Credibility
🥇 Dealer-supported appraiser opinion Excellent
🥈 Auction results Moderate
🥉 Online asking prices Moderate
⚠️ Book condition differences Weak–Moderate
❌ Algorithmic models Poor
❌ 17c & similar formulas Very poor
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🎯 Bottom line
Diminished value is a market phenomenon.
The best proof comes from people and transactions in the market, not formulas created to suppress payouts.
If the evidence answers this question—
“What would a willing buyer actually pay less because of this accident?”
—then it’s doing its job.
HOW DO INSURERS ATTACK EACH METHOD? IS THE APPRAISER’S CONTINUED ASSISTANCE CRUCIAL TO OBTAINING A SUCCESSFUL SETTLEMENT AMOUNT FOR DIMINISHED VALUE?
Yes—insurers attack every diminished value methodology in predictable ways, and continued involvement by the appraiser is often the deciding factor between a token offer and a real settlement.
Below is how insurers typically attack each method, followed by why ongoing appraiser participation is critical.
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HOW INSURERS ATTACK EACH DV METHOD
🥇 1) Appraiser opinion supported by dealer sales managers
Insurer attacks:
• “Dealer opinions are subjective”
• “No vehicles actually sold at that price”
• “Dealers are biased toward higher numbers”
• “This is speculation, not proof”
Effective counter:
• Multiple independent dealers (not one)
• Listings of names/titles
• Consistency across dealers
• Appraiser explains why dealers discount for accident history
• Appraiser testifies or rebuts in writing
➡️ Insurers retreat when the appraiser stays engaged and defends methodology.
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🥈 2) Auction results
Insurer attacks:
• “Wholesale prices don’t reflect trade-in or fair market value”
• “Condition and lane placement vary”
• “Auction vehicles aren’t comparable”
• “Too few data points”
Effective counter:
• Match VINs, trim, mileage, damage disclosure
• Use multiple auction venues
• Appraiser explains wholesale-retail relationship
• Demonstrate consistent deltas
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🥉 3) Online asking prices
Insurer attacks:
• “Asking price vs. selling price”
• “Listings are cherry-picked”
• “Vehicles remained unsold”
• “Sellers inflate prices”
Effective counter:
• Large sample sizes
• Time-on-market analysis
• Remove outliers
• Appraiser explains normalization methods
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⚠️ 4) Book value condition pages
Insurer attacks:
• “Books don’t measure accident stigma”
• “Condition ratings are subjective”
• “No court mandates book adjustments”
• “Insurer doesn’t use that guide”
Effective counter:
• Use as secondary support only
• Appraiser clarifies limitations honestly
• Tie condition deltas to real-world behavior
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❌ 5) Algorithms
Insurer attacks (ironically):
• “Model assumptions aren’t disclosed”
• “Inputs are incorrect”
• “The model doesn’t apply to this loss”
Reality:
• Algorithms collapse under scrutiny
• Proprietary black boxes fail evidentiary standards
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❌ 6) 17c and formulas
Insurer attacks (selectively):
• “17c isn’t required”
• “Courts don’t mandate formulas”
• “Your formula differs from ours”
Reality:
• Insurers only like formulas when they control them
• Formulas lose credibility fast when challenged
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IS CONTINUED APPRAISER ASSISTANCE CRUCIAL?
Short answer: Yes—often decisively.
Why initial reports aren’t enough:
• Adjusters are trained to test resistance
• First denial or low offer is strategic
• Insurers expect silence after submission
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What successful appraisers do after submission:
• Rebut insurer objections point-by-point
• Clarify misunderstood data
• Explain market behavior in plain language
• Adjust scope without changing conclusions
• Support counsel or the owner through negotiation
• Testify if needed
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Real-world pattern:
• No appraiser follow-up → claim stalls at $0–$500
• Active appraiser engagement → settlement rises materially
• Appraiser willing to testify → insurer re-evaluates risk
Insurers settle DV claims when the expert won’t go away.
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WHY INSURERS DISLIKE ENGAGED APPRAISERS
• They remove ambiguity
• They neutralize canned denial scripts
• They increase litigation risk
• They expose weak insurer methodologies
• They are credible to judges and juries
An appraisal is not a document—it’s a position.
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BOTTOM LINE
✔ Insurers attack methodology first
✔ When that fails, they attack credibility
✔ When that fails, they attack persistence
A diminished value claim succeeds not just on what is submitted, but on who stands behind it.
Insurers take auto diminished value appraisals seriously when opinions are based on the vehicle owner’s actual financial loss—through fair market or trade-in value—supported by independent dealer input, documented methodology, post-report engagement to rebut denials, and willingness to testify. Wholesale auctions, retail online asking prices, book value condition comparisons and abstract formulas or algorithms do not reliably reflect the owner’s loss and are generally disregarded.
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About Us
The St. Lucie Appraisal Company is a family-owned appraisal business offering nationwide services in automobile diminished value, total loss, loss of use, and personal property valuations since 1981. Our principal appraiser is Franklin Colletta. We have prepared more than 6,000 Auto Valuation and Diminished Value Appraisals to date. Our reports are recognized by courts, insurers, and financial institutions.
This is an Open Education Resource dedicated to transparent valuation methodology, collective knowledge, and the sharing of professional auto appraisal content.
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