Expert: Claims Guy - 1/25/2010

Question
My husband was in an accident a few months ago where he hit a light pole. His 2007 Tundra suffered quite a bit of damage. The insurance estimator said the damage was around $7,000. The shop that we took the truck to for repairs was near that estimate and highly recommended by the insurance company. We recently tried to trade the truck in to get a more economical vehicle and were informed that the damage to the frame lowered the trade in value sgnificantly. We were not informed of any damage or repair to the frame of the truck. We are now trying to get the truck totalled out, because this loss of value leaves us upside down on the loan. Beside the cost, it is also a safety issue. We are wondering what we can do to show the insurance company they made a mistake in doing repairs and have them total the truck now?

Answer
Unfortunately, I doubt there is anything you can do.  This is assuming that your husband was at fault in the accident.  If someone else was at fault, he can make a diminished value claim against that driver's insurance company.  Diminished value is not covered under collision coverage.

When you make a collision claim, the insurer pays the lesser of 2 things:  the repair cost or the retail value immediately before the loss occurred.  If the repair cost is less, they repair it.  If not, they total it and pay you the retail value.

Frame damage is very common and can be repaired safely.  It happens every day.  If it was done correctly, there is no safety issue.  Is the dealer claiming the repairs were done incorrectly?  If so, take the truck back to the shop and have them correct the repairs.

But if the repairs were done correctly, you have no complaint.  Diminished value is not covered under collision coverage.  In fact, it is specifically excluded. If the repairs were done correctly, there really shouldn't be any diminshed value anyways, except for the fact that potential buyers might have a "perception" of lower value.  Also, determining the trade in value of a vehicle is very subjective.  You might go to another deale and get a completely different offer.

It does not matter whether or not you are upside down on the loan.  This is not relevant to the insurance claim.