***UPDATE*** I compared three random diminished value settlements that clients have received using my appraisals and used the same Diminished Value Calculator most of these type of sites are using. Here’s the results:
- 2012 Honda Odyssey: My Appraisal – $10,275; Settled for $8500; The Diminished Value Calculator’s result: $1590
- 2010 VW Beetle: My Appraisal – $3720; Settled for $3000; The DiminishedValue Calculator’s result: $526
- 2004 Ford Explorer: My Appraisal – $1225; Settled for $700; The Diminished Value Calculator’s result: $36
- I can tell by the information that the calculator asks for that it must be based off of the 17c formula that a Georgia Supreme court found to be flawed. This makes me wonder if the insurance companies are actually the one’s behind this.
- Another explanation is the calculator intentionally gives low results so the insurance company will take the appraisal immediately. Why? because to most people, 2-300 hundred dollars is a good return for their investment. And they feel the calculator did an excellent job because the insurance company didn’t dispute it. Which leads them to write an awesome review stating how great the service is.
Using a DV Calculator, I’ve calculated several vehicles and the values tend to be about 25-35% of the real Diminished Value. So if you’re using an online calculator, and your real diminished value is $3000. then you’re going to lose around $1800. of your claim. All
The insurance companies are not stupid, they know it’s a computer generated report and that there’s no real value to it.
UPDATE: December 2015
Since I wrote this article several years ago, I’ve seen the values go up on many of these calculators. Some are even inflated values. So, reason would normally dictate, the higher the appraised value the larger the settlement. Not necessarily. I recently spoke to a client who purchased an appraisal where he determined the retail value, then the calculator produced the value. According to him, the insurance company has filed charges against him for insurance fraud because he determined his own preloss value incorrectly and it inflated the valuation. If you’re preparing your own appraisal, you may be setting yourself up for fraud charges. Have a third party independent appraiser prepare your appraisal. You’ll be glad you did.