Expert: webfoot - 2/25/2007

Question
I have a mint condition 2003 BMW with only 27,000 miles when it was hit a few months ago (I am in Virginia).  I had just bought it as a Certified Used BMW from a dealer, giving me another year on the still existing original warranty. The other drivers insurance, Progressive, paid for the repairs of about $3100, but have been tough on giving me diminished value.  My $350 private appraiser showed a loss of $7500 to my market value, but the insurance company appraiser only estimated $350.  After arguing, they agreed to come up to $1200, but no higher.  I have lost my Certified BMW status which was worth about $1700, plus market value of several thousand dollars accoring to the dealers in the area, but Progressive refused to acknowledge this.  Do I have any recourse but small court, which would end up costing me a bunch of money as well?

Answer
When considering diminished value (DV) you have to remember that the BMW certified program is a contract that you entered into yourself.  Neither Progressive nor the person who ran into are party to that contract and are therefore not responsible for any penalties associated with it.  You could have signed a contract stating that you'd have to pay $1,000 or cut off a finger if you traded in the car with cigarette odor, but that would not carry over to anyone who smoked in your car unless they were party to the same contract.

Based on my experience with dealers, they are likely telling you that the vehicle is diminished by several thousand dollars in hopes of buying it from you at a tremendous discount and then turning around and selling it at full book.

As a collision, mechanical and insurance professional, my standing is that diminished value is more about perception than reality.  Properly repaired vehicles are often closer to factory spec after a collision repair than they were before.  There has been an entire industry built around auto history information reporting but just like our credit reporting system, it is far from accurate.  These systems are great for warning buyers about prior total losses, flood vehicles etc. but only tend to scare buyers away on minor to moderate collision losses.  This system and it's associated misconceptions do not change what the actual liability is from the other party or their carrier.  

There is a huge variation between your private DV assessment and the Progressive's.  Without seeing the vehicle, the estimates and the individual reports, I cannot comment on which is more accurate.  

Common sense tells me that a $3100 repair on an '03 European car with very expensive parts is not going to diminish the value much at all.  I'd be surprised if there were any more than superficial damage for $3,100.  Think about this.  If your transmission failed tomorrow and had to be replaced for $3,000, would that lower the value of the vehicle?  Absolutely not.  In fact, most sellers would advertise "new transmission".  Yet some new sheet metal and paint is supposed to make the vehicle worth less money?  

Keep a copy of the repair bill and pictures.  When you're ready to sell the car, use the private market and stay away from dealers.  You'll likely do just fine.

Good luck!