Purpose
The Diminished Value Claim Denial letter is used to formally deny a claim for the perceived loss in resale value of a vehicle after it has been repaired. This is an adverse determination that requires a clear explanation of the factual and policy basis for the denial.
When to Send
This letter is sent when a claimant or insured makes a demand for diminished value ({{demand_amount}}) following the repair of their vehicle, and the investigation determines that such loss is not covered or has not been proven.
Required Components
1. Claim Facts & Repairs
Identify the claim ({{claim_number}}), the loss date ({{date_of_loss}}), and confirm that the vehicle ({{vehicle_year}} {{vehicle_make}} {{vehicle_model}}) has been repaired to its pre-loss condition according to industry standards.2. Policy Provisions & Definition of ACV
Cite the relevant policy ({{policy_number}}) provisions regarding the "Limit of Liability." Explain that the policy's obligation is to repair or replace the damaged property with property of like kind and quality, and that "diminished value" is often excluded or not within the definition of "loss."3. Factual Basis for Denial
Explain that the vehicle has been fully restored to its pre-loss functional and aesthetic condition. State that any perceived loss in resale value is speculative and has not been established by a realized loss (e.g., an actual sale).4. Application of Policy to Facts
Clearly state that because the vehicle has been repaired to its pre-loss condition and no actual loss in value has been proven, the demand for diminished value is denied under the terms of the policy.5. Denial Statement & Appeal Rights
Formally state the denial of the diminished value claim and provide information on how the claimant may request a reconsideration or file an appeal.Jurisdiction Notes
Universal
Diminished value rules vary significantly by state. Some states allow first-party diminished value claims, while others only allow third-party claims. This template follows the general principle that diminished value must be proven by more than mere speculation.Adjuster Guidance
- Review the specific jurisdiction's case law on diminished value before sending.
- Ensure the repair file confirms that all repairs were completed according to
- If the claimant provided an "appraisal" for diminished value, address why that