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Farmers Insurance Diminished Value Example Letter

(Disclaimer: The information provided on this site does not constitute legal advice. It is provided solely for use as a reference. If you need legal advice, you may wish to consult an attorney.)


[Your name and address here]

Via: Farmer’s National Document Center
PO Box 268994
Oklahoma City, OK 73126-8994

RE:       Claim Number: [your claim #]

Dear [Farmers person],

I hope this letter makes its way to the correct person; you are now the seventh Farmers person I have been referred to in trying to resolve my property damage claim.

This letter is in response to my inability to collect Diminished Value damages occurring as a result of an accident where the person insured by Farmers was at fault.  This letter is an attempt to clearly state why I believe I am owed Diminished Value, and why we believe the denial letter sent by Farmers is wrong in its conclusion.

After much disagreement with Farmers personnel on whether or not Diminished Value is owed in my case, it became evident that Farmers’ denial was based off their belief that the repairs restored the vehicle to its pre-accident condition, whereas my position was that the vehicle suffered a loss of market value regardless of the completeness of the repair (a concept known as “Inherent Diminished Value”) because a potential buyer has to accept more risk in buying a car which has been in an accident over a car which has not been in an accident, and this would affect the amount a potential buyer would be willing to pay for my car.

Just to be clear, and for the record, I am not contesting the quality of repairs performed on the vehicle and I am NOT seeking any damages related to any incompleteness of repair; I believe the car was repaired as well as can be repaired in the aftermarket.  My attempt to recover Diminished Value is solely based on the Inherent Diminished Value sustained as a result of the accident, which according to the report sent to Farmers (by Diminished Value of Texas) was a $4,855.00 loss.

In the interests of avoiding an otherwise unnecessary lawsuit against the insured, I hope that when Farmers is determining whether or not Inherent Diminished Value has occurred in my case the following two factors be deeply considered:

  1. There are several factors, many of them common sense and well established in prior tried cases, which contribute to the market psychology responsible for Inherent Diminished Value – i.e., why a car restored to the best possible condition will not have the same pre-accident market value:
    1. No repairs, no matter how well done, can ever restore the vehicle to the exact same condition it was in prior to the accident.  A buyer will have no way of knowing the answers to concerns such as how much metal fatigue occurred from the accident, whether or not the car will “crumple” in the same manner as designed in a future accident, whether any new paint is as durable as the original over time, whether or not electronics are more likely to fail in the future from the jar of the impact, and whether there are now warranty concerns which a virgin car would not have.  Rational concerns or not, the inability of anyone to answer these questions definitively forces any subsequent buyer to accept risk they would not need to accept had the car not been in the accident, and buyers require a lower price to compensate them for this assumption of risk.  That these factors are a concern in the mind of any luxury vehicle buyer is indisputable and has been well substantiated in court.  It also seems unreasonable to maintain that although I did not have these concerns prior to the accident, but I do have them now, the vehicle is still worth exactly the same.
    2. The more expensive the car, the easier it is to prove Inherent Diminished Value. If someone is paying “big money” for a quality car, they do not want to take the chance on one that has been in a wreck.  The car in question, a Mercedes CLK Convertible, had an MSRP of well over $60,000 and is likely to be regarded as a high-end vehicle.
    3. The newer the car, the easier it is to prove Inherent Diminished Value.  My Mercedes was only 5 months old at the time of the accident.  
    4. The more extensive the damage, the easier it is to prove Inherent Diminished Value.  My car was hit so hard by the insured that the automatic rollover-sensing pop-up roll bars deployed.  According to Mercedes technicians, this means that at least two of the four wheels fully left the ground upon impact.  It would be a tall order for Farmers to defend any position claiming that despite the car suffering this kind of impact, the car is still in pre-accident factory condition and potential buyers will definitely be willing to pay the same amount for it.


  1. In Texas Department of Insurance Commissioner’s Bulletin No. B0027-00 (April 6, 2000), the TDI took the position that “An insurer also may be obligated to pay a third party claimant for any loss of market value of the claimant’s automobile, regardless of the completeness of the repair [emphasis mine], in a liability claim that the third party claimant may have against a policyholder.”  If, as Farmers maintains, an adequate repair job is sufficient to restore the vehicle to its pre-accident market value, why did the TDI bother to include this statement?  I believe the answer is obvious, and would be so to any judge or jury hearing this case.

The Farmers representatives I have spoken with to date have only defended their position by stating how customers SHOULD act in their purchasing decisions, not how they actually DO act or HAVE acted in the marketplace.  I would be MORE THAN HAPPY to consider ANY relevant factual evidence that Farmers is using to arrive at their position; however, to date Farmers has refused to provide anything other than baseless conjecture and merely keeps repeating that there is no Diminished Value. 

I hope Farmers understands that given the above reasons why Inherent Diminished Value so clearly exists in my case, if reasonable accommodation for damages suffered is not made, I will have no choice but to file suit where I will seek full relief for damages to include the cost of the expert Diminished Value witness.
I look forward to hearing from you and resolving this matter quickly and without further depletion of anyone’s time. 

With respect and kind regards,

[your name here]

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