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Classic Car Insurance and "Diminution in Value"

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Shane

Shane

Jedi Warrior
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I just received my annual renewal for the Agreed Value policy for my Austin-Healey and noticed, printed on the last page of the policy, the following endorsement:

Coverage for Damage to your Auto Exclusion Endorsement

With respect to the coverage provided by this endorsement, the provisions of the policy apply unless modified by the endorsement.

I. Definitions

The following definition is added: "Diminution in value" means the actual or perceived loss in market or resale value which results from a direct and accidental loss.

II. Part D - Coverage for Damage to Your Auto

The following exclusion is added:

We will not pay for:

Loss to "your covered auto" or any "non-owned auto" due to "diminution in value."

All other terms and conditions remain unchanged.


Doesn't this effectively negate the "Agreed Value" of the policy? If my stated value is $50,000 and I file a claim, couldn't the insurance company find a $30,000 replacement and deem that as the "perceived loss?" Even if the condition and options are different?

I realize the insurance companies have to protect themselves; however, the classic car market is unique. Agreed Value policies are priced accordingly, and the reason that we purchase these policies is to protect our investments. If I deem that my Healey is worth $100,000, and the insurance company agrees to that, then my premium is priced accordingly.

I was going to call the agent to get an explanation, however, I wanted to see if anyone else has noticed this change on their policy.
 
Well....having been there in another non-automotive insurance issue almost 30 years ago.....

I had a whacking lot of old Lionel when we had a house fire. Some stuff was outright destroyed. ALL of it was somewhat damaged.

At that time, replacement cost for all of it was like fifteen grand.
They paid me 9500 for replacement of lost items, refinishing/repainting of stuff, and the decreased value (diminution) in value due to the repaint/refinish.
https://definitions.uslegal.com/d/diminution-in-value/
"
Diminution in value generally refers to a reduction in the worth of something caused by an action of a third party or entity. In the context of contract law, it refers to a breach of contract causing the decrease in value of property due to the failure to construct something exactly as specified in the contract. Diminution of value studies are often used in relation to real estate valuations in situations such as studies of the impact of locating an aiport near residences. Real estate valuations and diminution in value studies are meaningful only if based upon market data.
The diminution in value theory is currently gaining strength as a major consumer concern. In tort law involving auto accidents, this theory holds that damage to an auto results in a monetary loss in the market value even though the damage has been properly repaired.
Diminution in Value (DV) is the monetary difference between:

  • A car's pre-accident value
  • A car's value after an accident and repair"
 
I'd be really concerned if I had an untouched original car with low miles and all original panels and paint. As I understand it, "Diminution in value" seems to be mentioned more often now than in the past. If I buy a new Corvette for $70k and as I'm pulling it out of the lot while drunk with excitement I smash it into a telephone pole my insurance company is obligated to fix it as good as new. Let's say the body shop bill is $10k and my insurer pays the bill in full. But wait, that's not the extent of my loss. When I go to sell it in a few years, some picky Corvette guy sees the Carfax has an accident on it and will pay me less than book value. The difference between what book value is and how much less my car is worth is the "diminution in value". For a classic car that's already been restored, if it gets in an accident and the insurance company fixes it back to the same condition it was before the accident with some new parts, it's probably not going to suffer a whole lot of diminution value (there are exceptions of course). However if you had a totally original "time capsule" car, an accident could cause a huge loss in value. Probably best to talk it over with your broker and assess your insurance needs. I'm sure for an extra premium (probably exorbitant) the company would be happy to redline those conditions from the policy. BTW, what company is the policy with?
 
So, in other words, they won't pay you the difference in decreased value the now repaired car has? Seems someone should be on the hook for that.
 
Ok, it makes a little more sense now...just more legalese that I've never run across before. It's sad that I get more and more suspicious each day about dealings with insurance. I haven't had a bad experience, just a little paranoid I guess.

The company is Heacock Classic, underwritten by American Modern Insurance Group. I've had nothing but pleasant dealings so far, but then again...the car hasn't turned a mile since I got the policy, it's getting a major refresh. I just want to make sure I'm protected. I'm waiting for a call back from my broker, but now that I understand that this would be in regards to the value after repair, I feel better about it.
 
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