Diminished Value: State Farm's Waffling Position

"I don't see a lot of inconsistency [with State Farm's position on diminished value]" said Dick Luedke, media relations expert for insurance giant, State Farm. "The bottom line is that whatever our position on diminished value is, auto insurance policies don't generally cover claims for diminished value ... In most instances, skilled repairers can restore a vehicle to its preaccident condition and market value."

Hogwash! I thought to myself. I knew Dick Luedke knew better than that, and I suspected that he knew I knew he was just preaching the party line. Understanding he was just playing around with words to sidestep uncomfortable facts as media people so often do using oratory skills that make crafty politicians envious, I knew I had to ask pointed and direct questions to get to him.

"What does State Farm consider to be preaccient condition? If we had a metallurgist take a look at a crashed vehicle that has been repaired, I am certain he would find metal fatigue [and other similar conditions that would result in a weakening of the structure]. Are you saying this damage can be restored as well?" I asked.

"I don't understand the intricacies of the stability of metal," confessed Luedke. "So, I'm not the guy that can answer that for you."

"But at the same time you are telling me you have repairers that can fix that kind of thing?" I queried.

Luedke responded, "I'm telling you that is our company's position," referring to State Farm's contention that inherent diminished value doesn't exist.

"Is metal fatigue taken into consideration in State Farm's position?" I asked.

To my surprise Luedke answered quickly, perhaps too quickly, "I'm sure it is." [read more]

Although Toyota's oil sludge problem is mechanical in nature as opposed to being an auto collision repair issue, I couldn't help but be intrigued by the words "diminished value" in a Detroit Free Press (DFP) article, Toyota Settles Oil Sludge Cases.

Diminution in value, in its usual context, refers to the difference in a car�s market value immediately before a crash as compared to it's value immediately after a crash. Will having serious motor work performed or even an engine replaced result in diminished value?

It will be interesting to find out details on how diminished value losses will be calculated on these vehicles and what proof will be required to substanciate the losses.