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GuideOne Insurance Diminished Value Formula

by Diminished Value Car Appraiser on September 3, 2015

17C Formula Diminished ValueGuideOne calculates your diminished value based on the formula listed below.  Your completed settlement recap is enclosed.

 

Diminished Value Formula

 

Given the problems with using estimates, or agreed costs to repair, as well as the inadequate reporting of mileage, our formula will use modifiers for each of these factors.  This will allow for the diminished value calculation to be completed based on minimum numbers of subjective decisions by the company.

 

Factors of Diminished Value Formula

 

Determining the Actual Cash Value (ACV)- For the purposes of our calculations, we will use the NADA Official Used/Older Used CarGuide retail value, including additions and subtractions for options and mileage.  The NADA edition applicable to the time of loss should be used to determine the value.

 

GuideOne will use 10% of the ACV as a starting point in our formula.

 

Damage Severity Modifier- The nature and extent of the damages should be based on the actual physical damage sustained by the vehicle, without using the cost to repair as a basis.  The modifier can be from zero percent to 100% reflective of extensive damage.  It should be stressed that in some minor accidents the zero percent modifier is appropriate, as no diminished value would have been sustained.  A basic guide for the damage severity model is as follows:

 

Modifier – %                       Extent of Damage

  • Severe structural damage and replacement of 5 or more body panels, possible repair of other body panels.
    • Severe structural damage and replacement of 5 or more body panels, possible repair of other body panels.
    • Severe structural damage and replacement of 5 or more body panels, possible repair of other body panels.
    • Moderate structural damage and replacement of 5 body panels, possible repair of other body panels.
    • Moderate structural damage and replacement of up to 5 body panels, possible repair of other body panels.
    • Moderate structural damage and replacement of up to 4 body panels, possible repair of other body panels.
    • Minor structural damage and replacement of up to 3 body panels, possible repair to other body panels.
    • Minor structural damage and replacement of up to 2 body panels, possible repair to other body panels.
    • Minor structural damage and replacement of up to 1 body panel, possible repair to other body panels.
    • No structural damage and cosmetic repair to body panels (impact related).
  • No structural damage and no replaced body panels, possible minor cosmetic repairable damage to body panels. (Example: Vandalism – Keyed paint, cut vinyl or convertible top, slashed tires, etc)

 

Body panels are defined as major component outside replacement panels (example: fenders, hoods, headers, door panels and door assemblies, quarter panels, roofs, and deck lids, etc.)  Bumpers themselves are not considered a major component outside panel.

As this is a subjective decision, the modifier can be adjusted as necessary to fit the damages.

 

Mileage Modifier Formula- Generally, when a vehicle reaches 100,000 miles, it no longer has a realistic dealer retail value.  There may be some cases where this is not so, but for the most cars this figure should be accurate.  The modifier is a factor of the actual mileage of the vehicle and the mileage where a dealer no longer would consider the vehicle for retail resale.  Below you will find the mileage modifier formula:

 

100,000 – Actual Miles of Vehicle

100,000

 

Application of Diminished Value Formula – 10% of ACV x Damage Severity Modifier x Mileage Modifier Formula = Diminished Value

 

If you disagree with our diminished value settlement, please submit to us in writing the reasons for your disagreement including any written documentation supporting your position and we will carefully review it.

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