This loss is based on remaining flaws, defects, and damage, which the insurer had neglected to address. When an insurer negotiates the settlement of an automobile damage claim, they will typically provide an estimate of repairs, which outlines all specific procedures, parts, and materials that they are willing to pay to the claimant or insured.
This itemized listing of insurer authorized repairs will be generated by one of the following entities:
• An “in-house” appraiser, who is hired as a full time employee of the insurer, then trained to assess collision damage in accordance with policy provisions.
• An “independent” appraiser who is hired as a subcontractor to assess the damage on behalf of the insurer, who also follows insurer guidelines.
• An employee of a “Direct Repair” body shop, who agrees to prepare the assessments using the guidelines established by the insurer in exchange for consumer referrals from the insurer.
• In some cases, the insurer will offer to pay based on the lowest of three estimates. This will cause the level of compensation to be based upon the estimator with the least experience, inspecting the vehicle for the shortest time, using the poorest repair techniques, and potentially overlooking the most damage.
Under each of the above scenarios, the insurer is bound by law to the assessment and actions of the party the insurer hired to represent themselves. When the appraiser for the insurer (a, b, or c) prepares a damage assessments, or (d) where the insurer relies upon a third party, which overlooks, fails to specify, or refuses to address all repair procedures, parts, and materials required to restore the vehicle to its pre-loss condition, the insurer becomes responsible for “Insurance Related Diminished Value”. Since the insurer (and consumer) relies upon the skill and expertise of the insurer’s hired appraiser, it would be incumbent upon the insurer to select competent and skilled persons as appraisers so that by complete repair to pre-loss function, appearance, safety, and value, the insurer would have met their contractual obligations.
Any failure to authorize all required procedures, parts, and materials to restore a vehicle to its pre-loss condition must be caused by one of the following:
• Inexperience, lack of training, or incompetence on the part of the insurer’s selected appraiser.
• Company guidelines set to discourage or prohibit the authorization and payment of all required procedures, parts, and materials.
• Fraud on the part of the insurer by willful and intentional underpayment of all required procedures, parts and materials.
When there is remaining flaws, defects, or damage on the vehicle, and repair procedures were not specifically listed on the itemized insurance authorized repairs, the result would be “Insurance Related Diminished Value”. Additionally, when the insurer specifies imitation parts, which are NOT EQUAL TO, OR BETTER THAN the Original Equipment Manufacturer parts, the insurer would also be responsible for the Diminished Value caused by the inferior parts they specified.