Diminished Value Claim

[WBT]

Stu / Flywise,

It basically states "Insured Amount" with the total being what I recall from the conversation which is $5k under sticker.

I honestly don't understand the ins game but am trying to avoid what the OP & others have been going through. Like the others, if your car is repaired then you are going to have diminished value even if it is repaired first class.

Maybe I am misunderstand gap Ins & the mention of gap having value if upside down?? I thought gap covered the difference of the dm to help the OP in these very situations??

So, I have a policy stating the insured amount is $5k under sticker & I'm happy with that coverage IF it was totaled & am actually going to get the "Insured Amount" stated on the policy.

If I get hit & it gets fixed (regardless if my ins or not), the car is no longer worth what we agreed...it has lost value I cannot get back. I 'thought' this what was gap was for??

Gap insurance isn't what you're looking for. That type of insurance is for people who buy a new car with next to nothing down and immediately go underwater the moment they drive off the lot. A lot of financing companies require it.

Let's imagine someone buys a new $45K car with $2.5K down. Now let's imagine they total the car less than a month after buying it. The actual cash value of the car is $35K due to depreciation and that's what the owner receives from the insurer. The driver is left paying the $7.5K difference out of pocket. That's what gap insurance is intended to cover.

Most auto polices provide actual cash value coverage. The coverage they provide is exactly as it sounds (depreciation is taken into consideration) and as noted above, they typically won't pay for a first party diminished value claim. The situation is different if you're trying to recover from another driver's policy, in which case it's a third party claim and there's coverage for diminished value.

In your case, it sounds like you have an agreed value policy, which is a totally different animal. These aren't uncommon policies, but it's not something most people are familiar with. You have to specifically ask for it and the increased premium reflects the added coverage. If there's any doubt, send your broker an e-mail very clearly articulating your concerns. That will get their attention and ensure you have the policy that's right for you.

[Cottonfish]

Paul, gap insurance addresses the amount between what you have financed and what insurance pays on a total loss. Say, if the vehicle totals and you owe $10k, but insurance only pays $8k, gap insurance will cover the $2k "gap" you owe the lienholder.

Owing more than the vehicle is worth is called being "upside down" on equity, or having negative equity. Having positive equity is owing less than the vehicle's value to a lienholder. Gap insurance is to protect you when you are upside down on equity, which usually happens when a vehicle is financed without a large enough down payment or trade in value. You are "upside down" on the note until you complete enough of the payment cycle so that your remaining payments are less than the value of the car.

Gap insurance does not cover diminished value, or the speculative loss in value a vehicle suffers due to damage and subsequent repair.

Stu

[Artos]

Thank you Stu & WBT...my bad. Ignorance is curable, stupid is forever as I have the title.

I just cut the check for another year & will give a call to discuss my concerns. I really appreciate these threads & has me scratching my head on my wife's / son's more conventional policies as well with this whole dm value & going to reach out to that agent as well.

Gap insurance isn't what you're looking for. That type of insurance is for people who buy a new car with next to nothing down and immediately go underwater the moment they drive off the lot. A lot of financing companies require it.

Let's imagine someone buys a new $45K car with $2.5K down. Now let's imagine they total the car less than a month after buying it. The actual cash value of the car is $35K due to depreciation and that's what the owner receives from the insurer. The driver is left paying the $7.5K difference out of pocket. That's what gap insurance is intended to cover.

Most auto polices provide actual cash value coverage. The coverage they provide is exactly as it sounds (depreciation is taken into consideration) and as noted above, they typically won't pay for a first party diminished value claim. The situation is different if you're trying to recover from another driver's policy, in which case it's a third party claim and there's coverage for diminished value.

In your case, it sounds like you have an agreed value policy, which is a totally different animal. These aren't uncommon policies, but it's not something most people are familiar with. You have to specifically ask for it and the increased premium reflects the added coverage. If there's any doubt, send your broker an e-mail very clearly articulating your concerns. That will get their attention and ensure you have the policy that's right for you.

Paul, gap insurance addresses the amount between what you have financed and what insurance pays on a total loss. Say, if the vehicle totals and you owe $10k, but insurance only pays $8k, gap insurance will cover the $2k "gap" you owe the lienholder.

Owing more than the vehicle is worth is called being "upside down" on equity, or having negative equity. Having positive equity is owing less than the vehicle's value to a lienholder. Gap insurance is to protect you when you are upside down on equity, which usually happens when a vehicle is financed without a large enough down payment or trade in value. You are "upside down" on the note until you complete enough of the payment cycle so that your remaining payments are less than the value of the car.

Gap insurance does not cover diminished value, or the speculative loss in value a vehicle suffers due to damage and subsequent repair.

Stu