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North Carolina Diminished Value Law GS 20-279.21
The diminished value claimant needs to know if they have a justifiable claim. Not having a "licensed" appraiser providing guidance, the diminished value claimant will only hear the at-fault auto insurer's claims adjuster reasons why the diminished value claim is denied, or will get a low ball take it or leave it offer. If claimant takes the offer, 99.99% likely the claimant sold themself short of more money a "licensed" appraiser could have gotten. Rejecting the claims adjuster's offer, you are now forced to hire a " licensed" appraiser. Scroll down for Insight to GS 20-279.21(d1) Diminished Value Appraisal Clause Law.
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G.S.20-279.2. Commissioners to administer Article; appeal to court.
Except for G.S. 20-279.21(d1), the Commissioner shall administer and enforce the provisions of this Article and may make rules and regulations necessary for its administration and shall provide for hearings upon request of persons aggrieved by orders or acts of the Commissioner under the provisions of this Article. The Commissioner of Insurance shall administer and enforce the provisions of G.S. 20-279.21(d1) and may make rules and regulations necessary for its administration.
(o) An insurer that fails to comply with subsection (d1) or (m) of this section is subject to a civil penalty under G.S. 58-2-70.
North Carolina Diminished Value (Appraisal Clause) Law GS: 20-279.21(d1)
(d1) Such motor vehicle liability policy shall provide an alternative method of determining amount of property damage to a motor vehicle when liability for coverage for the claim is not in dispute. For a claim for property damage to a motor vehicle against an insurer, the policy shall provide that if:
(1) The claimant and the insurer fail to agree as to the difference in fair market value of the vehicle immediately before the accident and immediately after the accident; and
(2) The difference in the claimant's and the insurer's estimate of the diminution in fair market value is greater than two thousand dollars ($2,000) or twenty-five percent (25%) of the fair market retail value of the vehicle prior to the accident as determined by the latest edition of the National Automobile Dealers Association Pricing Guide Book or other publications approved by the Commissioner of Insurance, whichever is less, then on the written demand of either the claimant or the insurer, each shall select a competent and disinterested appraiser and notify the other of the appraiser selected within 20 days after the demand. The appraisers shall then appraise the loss. Should the appraisers fail to agree, they shall then select a competent and disinterested appraiser to serve as an umpire. If the appraisers cannot agree upon an umpire within 15 days, either the claimant or the insurer may request that a magistrate resident in the county where the insured motor vehicle is registered or the county where the accident occurred select the umpire. The appraisers shall then submit their differences to the umpire. The umpire then shall prepare a report determining the amount of the loss and shall file the report with the insurer and the claimant. The agreement of the two appraisers or the report of the umpire, when filed with the insurer and the claimant, shall determine the amount of the damages. In preparing the report, the umpire shall not award damages that are higher or lower than the determinations of the appraisers. In no event shall appraisers or the umpire make any determination as to liability for damages or as to whether the policy provides coverage for claims asserted. The claimant or the insurer shall have 15 days from the filing of the report to reject the report and notify the other party of such rejection. If the report is not rejected within 15 days from the filing of the report, the report shall be binding upon both the claimant and the insurer. Each appraiser shall be paid by the party selecting the appraiser and the expenses of appraisal and umpire shall be paid by the parties equally. For purposes of this section, "appraiser" and "umpire" shall mean a person licensed as a motor vehicle damage appraiser under G.S. 58-33-26 and G.S. 58-33-30 and who as a part of his or her regular employment is in the business of advising relative to the nature and amount of motor vehicle damage and the fair market value of damaged and undamaged motor vehicles.​​​
Insight to G.S. 20-279.21(d1) Appraisal Clause Process
The appraisal clause plays out like this:
Step 1. When you and the insurance company fail to agree on the amount of diminished value (the difference in market value before and after the accident) and…
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Comment. This rarely happens.
Step 2. The difference in the claimant's and the insurer's estimate of the diminution in fair market value is greater than two thousand dollars ($2,000) or twenty-five percent (25%) of the fair market retail value of the vehicle prior to the accident.
$2,000.00 Difference Explained. You have a 2023 model vehicle and the cost of repairs was $4,500.00. Naturally the cost of repairs would not meet or exceed 25% of the vehicle value. Therefore your diminished value claim needs to be at least $5,000.00.
Why?
If you make a claim at $3,500.00, the at-fault insurance company will make a counter offer of $1,500.00. You are not $2,000.00 apart and you’re basically stuck with the $1,500.00.
Step 3. When you and the at-fault auto insurer are $2,000.00 apart or the cost of repairs meets or exceeds 25% of the vehicle’s value, then either the auto insurer or claimant can make a written demand invoking the appraisal clause.
Comment. Most auto insurers will not invoke the appraisal clause, yet some will.
Comment. In North Carolina, when the seller has knowledge of damages he/she cannot make any untrue statements in misrepresenting the vehicle condition or history. This is considered as FRAUD.
Comment. When the cost of repairs exceeds 25% of the value, the vehicle owner is now bound by the North Carolina 25% damage disclosure law to announce/ disclose the damages to all potential buyers, indicating such on the backside of the North Carolina Certificate of Title.
Step 4. Each selects a competent and disinterested appraiser. Meaning, you and the insurance company hires their own disinterested third-party appraiser.
Comment. When you are at Step 4, it’s best to have an appraiser already standing by. When your chosen appraiser hears the name of the at-fault auto insurer, there is a very good chance your appraiser will know who the at-fault auto insurer's so-called disinterested appraiser will be. You and your appraiser should discussed the possible outcome.
Step 5. The two appraisers then appraise your diminished value and attempt to reach an agreement on what the settlement amount should be. If they agree on a number; the appraisal clause is over, and the insurance company will send you a check for the agreed upon amount.
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Step 6. If the appraisers fail to agree, an umpire is then selected. The “umpire” and the “appraiser(s)” must be licensed by the state of North Carolina Department of Insurance as a “motor vehicle damage appraiser.” The umpire will review the claim and prepare a report to decide on the final diminished value amount. The umpire’s decision can’t be any higher or any lower than what the two appraisers stated in their appraisals. It will fall somewhere in between.
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Going to Umpire. Going to umpire is not that simple. Both appraisers have to agree to an umpire. If the two appraisers cannot agree upon an umpire within 15 days, either the claimant or the insurer may request that a magistrate resident in the county where the insured motor vehicle is registered or the county where the accident occurred select the umpire.
Umpires fees are split by both parties. Umpire fees can range from $300 /$150.00 - $600 /$300. It’s best you and your appraiser discussed matters of expectations
Step 7. The umpire's ruling is nonbinding; meaning either you or the insurance company can reject umpire's ruling within 15 days.​
Comment. When the umpire’s ruling is rejected, next course of action is suing the at-fault driver in North Carolina Small Claims Court. Small Claims Court maximum amount to sue for is, $7,500 to $10,000.
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11 NCAC 04 .0425 DEFINITIONS
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As used in this Section the following terms shall be construed as follows:
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(2) "Claimant" means a first-party or third-party claimant.
(3) "Diminution in Fair Market Value," as that term is used in G.S. 20-279.21, means the difference in the fair market value of the vehicle immediately before the accident and after any repairs made to the vehicle as a result of the accident have been completed.
(4) "Disinterested appraiser," as that term is used in G.S. 20-279.21, means a motor vehicle damage appraiser who:
(a) Is not employed by either the claimant or the insurer;
(b) Has no financial interest in the outcome of the appraisal; and
(c) Did not participate in the original appraisal.