At Tiger DV we’ve helped with thousands of diminished value claims, and as a result we’ve learned a whole lot about how DV claims and Property Damage claims, in general, work. We’ve seen almost every possible claim scenario and situation. One of the things that may come up in a claim is the issue of a low at-fault policy limit for Property Damage.
In all states outside of Georgia, diminished value can only be claimed from the at-fault insurance. This means that the maximum available insurance coverage for a DV claim is the Property Damage limit of the at-fault party’s Liability policy. In states with low required coverage minimum for PD, the policy limit may present an issue.
As of 2024, depending on the state, the state minimum coverage for Property Damage Liability varies from $5,000 to $25,000. Of course, let’s remember that this is just the minimum coverage – any particular policy could have much more coverage than the state minimum. You can review the minimum Property Damage Liability coverage in your state here, courtesy of nerdwallet.
When you don’t need to worry about this.
If the minimum is Property Damage liability coverage in your state is higher than your total Property Damage cost including repair cost, loss of use (rental) and diminished value – you don’t need to worry about policy limits. For example, let’s say you’re in Texas where the PD minimum is $20,000, your repair cost is $7,000, your DV is $4,500, and your rental is $5,000. Your total PD costs are $16,500 and the state minimum coverage is $20,000 – it’s more than enough. In this case, as a claimant, you don’t need to worry about policy limits and can safely skip the rest of this post.
How to maximize available coverage for your Diminished Value claim
If the at-fault party’s PD coverage limit is not known or you live in a state with a low PD coverage limit – it’s always best to handle your claim in a way that maximizes available coverage. The way to do this is the following.
- Make repairs and cover the rental with your own insurance.
- Only claim DV from the at-fault insurance while preventing subrogation until your DV claim is paid out.
Doing it this way allows you to draw on two Property Damage policies instead of just the at-fault policy limit. If you repair or get a rental from the at-fault insurance that will reduce the available coverage limit for your DV claim because those costs come out of the same Property Damage Liability policy that covers DV.
Here’s an example.
You’re in Texas, and the at-fault party has the state minimum Liability PD coverage of $20,000. You have a Collision policy with your own insurance with a limit of $30,000. You incurred the following damages and costs.
- Repair cost $11,000.
- Rental $9,000.
- DV $7,000.
Your total PD costs are $27,000. If you only use the at-fault party’s insurance for Property Damage, you will completely exhaust the policy with repairs and the rental leaving $0 for your DV claim. So instead of $7,000 for DV, you will get nothing! But now let’s say you used two policies – your own and the at-fault’s – your combined coverage immediately goes up to $50,000! And that is more than enough to cover all your damages of $27,000.
So in this example, you will do the repairs and the rental through your own insurance for a total of $20,000, and claim DV with the at-fault insurance for $7,000.
But won’t my insurance subrogate out of the at-fault’s policy limit?
Subrogation is what happens when the accident wasn’t your fault, your insurance covers certain Property Damage costs such as repairs and/or rental, and then attempts to get reimbursed for them by the at-fault insurance. Naturally, the question arises – if I use my own insurance for repairs and rental – won’t they subrogate out of the at-fault’s liability policy and reduce the limit available to me for my DV claim?
Not if you properly assert your rights. According to the “made whole” doctrine, your DV claim has priority over any subrogation. In other words, your insurance company has a right to subrogate but only after your DV claim has been satisfied. In our Claim Guide which is included in the Appraisal Package, we explain how your claim priority can be properly asserted so that your own insurance doesn’t “plunder the piggybank” before you are made whole on your DV claim.
But won’t I have to pay the deductible if I use my own insurance?
If you have a policy with a deductible then, yes, you will pay the deductible but you will recoup it from the at-fault party’s liability insurance.
But won’t my insurance premiums go up if I use my own policy?
In California and Oklahoma, insurers are not allowed to increase premiums for not-at-fault accidents. Outside of those states, your premiums may go up but let’s use our example from above. Which of the following would you rather experience?
- You only use the at-fault insurance for compensation, and get $0 for DV instead of $7,000. Your premiums don’t go up.
- You use both companies, and you get $7,000 for DV instead of $0. Your premiums go up.
It should be obvious that the latter is in your best interest by far. Insurance coverage exists to be used when needed. What would be the point of paying premiums and never using your coverage? And even if your premiums go up, you can always shop around for a better rate.
Why this is important for your DV claim
We’ve seen countless claims where understanding the above made the difference between getting many thousands of dollars in DV compensation and getting nothing. Of course, an average car owner doesn’t have the deep knowledge and experience in insurance claims to understand critical concepts like this.
We do, and we’ll be happy to help you.
