How Diminished Value Claim Process Works in North Carolina
North Carolina Diminished Value Law G.S. 20‑279.21(d1)
GS 20-279.21(d1) was written by legislators to provide an alternative method and cost effective way in settling a diminished value claim, versus the more expensive way of suing the at-fault driver in civil court. Under GS 20-279.21(d1) a quote or letter of diminished value from a new/used car dealer IS NOT ACCEPTABLE; due to the fact the new/used car dealer has a vested interest in hope of a possible trade. THE ONLY PERSON who can appraise your vehicle is an appraiser licensed by the NCDOI / North Carolina Department of Insurance as a "motor vehicle damage appraiser." So again do not waste your time getting an appraisal from a new/used car dealer. Now G.S. 20-279.21(d1) has been broken into sections with notes in order for you to have a better understanding of the law and steps needed in filing your diminished value claim with the at-fault auto insurer in North Carolina.
(d1) Such motor vehicle liability policy shall provide an alternative method of determining the 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,....
Note 1-- Little thought by legislators was given when writing sections 1-2. Unless you are in the new/used car business, a vehicle salvage buyer or used-car total loss re-builder, you cannot agree or disagree with the insurer as to the difference in value before and immediately after the accident. Either way the insurer is going to force you to hire an appraiser.
Note 2 -- $2000 difference: Let's say the claimant's vehicle sustained $6000 in damages and makes a demand for $3,500 for diminished value; the auto insurer comes back saying the loss is $1,500 just inside the $2000 difference. By this $1,500 is all the claimant will get if they do not have an appraiser on there side. Now here is what you do; even though you will not get the auto insurer to pay it, make you demand for diminished value at the cost of repairs, you will diffidently be $2000 apart. Either way the insurer is still going to force you to hire an appraiser.
Note 2a -- 25% of the fair market retail value of the vehicle: This is where many auto insurers try BSing the claimant stating: "oh since the repairs did not meet or exceed 25% of the vehicle value, you do not have to disclose damages, so we do not owe you diminished value." This is total BS, there is no North Carolina law that will support this comment. Also if there is or is not an accident report or CARFAX reporting damage history there is a "Damage Disclosure Catch 22" which is: "when the seller has knowledge of damages they cannot make any untrue statements in misrepresenting the condition of the vehicle; this would be considered as fraud." So no matter the amount of damages (5% -10%) under GS 20-279.21(d1) you do have a right for diminished value. This is where an ethical appraiser will explain the cost vs benefit in hiring an appraiser and the possible diminished value dollar amount return.
(3) 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,
Note 1 -- Selecting a competent and dis-interested appraiser: (1) BE CAREFUL OF OUT-OF-STATE APPRAISERS! There are on-line appraisers who are not properly licensed and do not know North Carolina laws on diminished value and vehicle damage disclosure. However they may baffle you with BS making your think they are. So ask for a copy of their NCDOI Motor Vehicle Damage Appraiser license. (2) Be careful of bait and switch appraisal fees (inspection fees not included). For one set cost/fee, the appraiser you hire should appraise and discuss loss with the auto insurer's dis-interested appraiser along with answering any questions the claimant may have throughout the claims process. So before hiring an appraiser make sure of the cost and service you receive. (3) Check the appraiser's BBB ratings / reviews and Google reviews to see what past customers say about the appraiser. (4) Don't be like the Lexus owner by going on your own, spend a few hundred dollars for a good appraiser; the return of several thousands to you is worth the cost.
Note 2 -- The appraisers shall then appraise the loss: It is common practice by insurance companies to claim their dis-interested appraiser appraised the loss at $X amount and that that is all they will pay. DO NOT let this statement deter you! The auto insurer is doing what they can to keep their appraiser from discussing claim with your appraiser. You have to remember GS 20-279.21(d1) is in force and the auto insurer has to allow their appraiser to discuss the amount of loss with your appraiser. It may take forceful action by filing complaint against the auto insurer to the NCDOI to make it happen, but it will happen.
Note 2a -- It is nothing uncommon for the two appraisers to be thousands of dollars apart and the negotiating process begins. The appraiser for the insurance company is under the insurer's thumb to keep the amount of loss low. When the appraiser for the insurance company is only willing to adjust their amount of loss by $500 to $1000 saying it will take an umpire to get more than that appraiser is not a dis-interested appraiser. Still many times an agreement of loss is made and many times an umpire has to decide on.
Note 3 -- Selecting an umpire: If the appraisers are unable to agree on a competent and disinterested appraiser,as an umpire then you or the insurance company may request that a magistrate select the umpire. The deciding magistrate must be a resident in the county where (a) the accident occurred or (b) the insurance company’s policyholder’s vehicle is registered. When the claim goes to umpire both the claimant and auto insurer split umpire fee. Umpire fees range from $125 to $200 for each side.
3 Continue .... 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.
(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."
Disclosure Notice: The information provided by is not and should not be taken as legal advice. Danny Wyatt is not an attorney nor claims to be an attorney. Danny Wyatt has vast experience in handling diminished value claims under NCGS 20-279.21(d1) and is a current member of the North Carolina Department of Insurance External Appraiser and Repair Task Force Board. Danny is simply sharing information how the diminished value claim process works under NC GS 20-279.21(d1)