A car accident can leave you with vehicle damage, unexpected expenses, and a car that may be worth less than it was before the crash. While you may rely on the insurance company to fairly assess your losses, the amount it offers might be lower than you expected. Insurers may use different valuation methods, settlement approaches, or details about your vehicle and accident when determining how much a claim is worth.
Understanding how insurance companies devalue car accident claims can help you recognize why an insurer’s evaluation may not fully or accurately reflect your losses. From assessing comparable vehicles to considering diminished value, an insurer’s initial offer may not always tell the full story.
What Does It Mean When an Insurance Company “Devalues” Your Claim?
When an insurance company “devalues” your case, it means that the insurer has determined that your losses are worth less than what you believe they are. In a car accident insurance claim, this typically involves the insurer offering you a settlement that does not fully reflect the vehicle’s market value, the extent of the vehicle value loss, or the actual loss you sustained.
A devalued claim can, therefore, leave you with compensation that is less than the financial impact of the accident. Knowing how the insurer calculated the offer presented and whether the results account for the full extent of your loss can help you figure out if the settlement provided fairly represents your claim and getting your car fixed.
What Tactics Do Insurance Companies Use to Devalue Car Accident Claims?
Insurance companies have an interest in limiting how much they cover for a car accident claim. As such, an insurance adjuster may assess the factors involved, the vehicle’s condition, your medical records, and other evidence to find reasons to minimize the payout settlement. Many insurers, including major carriers, may implement several tactics to challenge the value of a claim:
- Make an early offer prior to evaluating the full extent of your losses.
- Rely on settlement-calculation software to create claim values that do not entirely account for the evidence presented.
- An adjuster may cite high mileage, prior damage, or non- OEM parts (and aftermarket parts) to justify a lower vehicle valuation.
- Focus on the repair cost rather than accounting for diminished value or other losses linked to the accident.
- Gaps in medical treatment may be used in an argument over injuries being less serious than initially claimed.
- Dispute that existing medical conditions may explain current symptoms.
- Contest that diminished value is not owed even when an accident affects a vehicle’s resale value.
- Delays in the claim process may implement pressure to accept a settlement before the full extent of loss has been learned.
Knowing each of these tactics can help you evaluate whether an offer you are given accurately reflects your losses, but when negotiations are stalled, legal representation can help challenge the insurer’s position and seek compensation backed by supported evidence.
Does Repairing Your Car Really Restore Its Full Value?
Repairing a damaged vehicle can help restore its appearance and functionality. However, it does not always regain its full market value, because a repaired vehicle may still be worth less to potential buyers due to its accident history and raise concerns about its reliability.
A vehicle’s post-repair condition, nonetheless, does not necessarily tell the entire story about its value. Even when repairs help the vehicle return back to a functional condition, the accident history will keep affecting what buyers are willing to pay.
Should You Sign a Full and Final Release Before Evaluating Diminished Value?
You may want to look into your vehicle’s diminished value before signing a final release. Once the release is finalized, you may give up the ability to pursue more compensation pertaining to the accident based on the terms of the agreement.
Before completing the claim process, determine whether you may be entitled to diminished value in addition to the cost of repairs. Taking this step can help you understand whether the proposed settlement provides full compensation for your losses.
If you believe your vehicle lost value because of the accident, consider whether you can file a diminished value claim with the at fault driver’s insurer before releasing the insurer from further liability. Once a release has been signed, it is to recover additional compensation.
How Does Comparative Fault Affect an Insurance Offer in California?
Comparative fault and state law can affect how much compensation you may recover after a car accident. If the at fault party is responsible for causing the incident, their insurance may have to cover certain losses. However, the amount you are entitled to receive may be based on how fault is divided between you and the other driver.
The type of claim can also matter, because state laws have their own unique implications, comparative fault rules can have an effect on your settlement. For instance, California follows a pure comparative negligence rule (Li v. Yellow Cab Co.), which his means that compensation can be reduced by your percentage of fault. So, if you are found 20% responsible for the incident, your recovery may be reduced by 20%. Knowing how California assigns fault and which insurance coverage is applicable can help you assess whether an insurer’s settlement offer fully accounts for your losses.
Why Do Medical Records Matter So Much in an Insurance Claim?
Medical records can play an important role in showing the extent of an injury and how it affected a person’s life after an accident when a claim seeks compensation. Insurers review these records to understand the timeline of symptoms, diagnoses, treatment, and recovery.
The consistency of medical care is important because any gaps in treatment may have an insurer question whether symptoms continued during that period or why treatment was interrupted. Additionally, medical documentation can also support the impact an injury has had on a person’s daily life which can help support claims for economic and non-economic damages under CACI 3903A and 3905A.
While insurers do not use one universal formula for every claim, consistent documentation can help provide a better picture of the injuries, treatment, and damages being sought.
Can an Insurer Dispute Pain and Suffering?
An insurer may dispute the value of pain and suffering by questioning the severity, duration, or impact of the injuries. As pain and suffering is considered to be non-economic losses (under California Civil Code § 1431.2) they do not have a specific dollar amount that can be shown on a bill or receipt.
Since there is no mandatory multiplier that insurers must use to calculate such losses, the evaluation may, instead, look into certain factors, like the nature of the injury, duration of recovery, treatment given, and how the injury impacted your daily life.
The difference between the amount an insurer offers and the amount a claimant believes reflects their pain and suffering may come down to how each side assesses medical documentation, personal impact logs, and shared liability.
What Should You Review Before Responding to a Low Settlement Offer?
Before responding to a low settlement offer from the at fault driver’s insurance, you should look into the evidence supporting each part of the claim. It can also be beneficial for you to review how the insurer decided on the amount provided and whether all losses were actually considered. For vehicle damage, this may include immediate diminished value and repair-related diminished value (based on the circumstances involved).
Looking at the offer as an entirety can help demonstrate whether the insurer’s assessment differs from the value of the claim. A thorough evaluation can also determine if additional documentation or explanation is needed before you give a finalized response to the insurer’s offer.
Does a Low Settlement Offer Mean the Insurance Company Is Acting in Bad Faith?
A low settlement offer does not mean an insurance company has acted in bad faith. Bad faith is noted as a separate legal issue that may depend on the insurer’s conduct and the factors surrounding how the claim is being handled.
For example, an insurer may evaluate different types of diminished value when reviewing a vehicle-related claim. Inherent diminished value may be considered when a vehicle loses market value because it has a documented accident history even after repairs are done. A disagreement over how such losses should be valued, however, does not automatically indicate misconduct.
If an insurer appears to be addressing a claim in an improper manner, the circumstances and available evidence may need to be reviewed to determine whether there is a potential legal issue that is not tied to a simple disagreement over the settlement amount.
What Can You Do If You Disagree With the Insurer’s Evaluation?
If you disagree with an insurer’s evaluation, you should look into the information they used to decide the value of your claim. You may be able to add more evidence, fix any errors found in the details shared, or provide documents that better explain your damages. You can also try to negotiate if you think what they are giving you is too low.
The key takeaways are to understand why the insurer made its offer, check the information used to value the claim, and address any errors or missing details. If the disagreement involves significant damages or cannot be resolved through negotiation, having a legal expert review your claim may help you understand what options are available.
At West Coast Trial Lawyers, our California personal injury attorneys are readily available to look at the insurance company’s evaluation, address any notable issues with the value of your claim, and advocate on your behalf to get you the compensation you may be entitled to.
Get in touch with us today for a FREE consultation by calling (213) 927-3700 or filling out our convenient online contact form.
This article is for informational purposes only and does not constitute legal advice. Always consult an attorney about your individual case.
