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Flood damage, diminished value in Texas

To start, I live in Texas, and have full coverage from Progressive on a 2008 Chevy HHR that I bought brand-new a little over year ago.

My car was recently flooded while parked outside my home.

The car was never started, and the flooding was fairly minor, about 2 inches standing in the floorboards.

My concern is that if I accept the repairs and take the vehicle back, it will still be stamped as a flood car, making it's re-sale value plummet. Do I have to accept the car back if it's not totaled, and am I qualified for any diminished return claim?



Well, you have to read your policy very carefully. Even under full collision and comprehensive coverage, the insurance company most likely agrees (insuring agreement) to either fix or replace your car. They replace with a total loss or they can fix it. There is probably no rights regarding your refusal to “take” the car back. They simply owe to fix the car if it is not a total loss, and they have probably not made any representation about insuring the title or the resell value of the car.

Likely, a progressive auto policy will not give you diminished value as they have probably disclaim that damage from the policy. Again, you need to read your policy to determine this.

The case law however in Texas has taken a look at this issue. Here is what we found
In Carlton v. Trinity Universal Ins. Co., 32 S.W.3d 454 (Tex. App. - Houston 14th Dist. 2000), the court held:
“Where an insurer has fully, completely, and adequately ‘repaired or replaced the property with other of like kind and quality’ any reduction in market value of the vehicle due to factors that are not subject to repair or replacement cannot be deemed a component part of the cost of repair or replacement.”

Also, in Smither v. Progressive County Mutual Ins. Co., 76 S.W.3d 719 (Tex. App. - Houston 14th Dist. 2002), the court refused to allow recovery of diminution of value. In American Manufacturers Mutual Ins. Co. v. Schaefer, 124 S.W.3d 154 (Tex. 2003), the Texas Supreme Court held that: “The actual market value of the vehicle before injury may be considerably less than the cost of repairs plus the loss of market value; or the actual market value may be more than the cost of repairs plus the loss of market value.”

The Supreme Court refused to rewrite the insurance contract and held: “AMM elected to repair the damaged vehicle and Schaefer does not contend that the repairs were faulty, incomplete or inadequate. If he did, then the insurer might be liable for breaching its obligations under the policy's terms. But Schaefer would still only be entitled to the remedies outlined in the policy, which do not include compensation for a fully repaired vehicle's diminished market value. We acknowledge that Schaefer's repaired vehicle may
command a smaller sum in the market than a like vehicle that has never been damaged, and that awarding Schaefer diminished value in addition to repair would go further to make him whole. But we may neither rewrite the parties' contract nor add to its language.

See Royal Indemnity Co. v. Marshall, 388 S.W.2d 176, 181 (Tex. 1965).”The Texas Department of Insurance Bulletin B-0027-00 (2000) states: “The position of the Department is that an insurer is not obligated to pay a first party claimant for diminished value when an automobile is completely repaired to its pre-damage condition. The language of the insurance policy does not require payment for, or refer to, diminished value.”

As you can see, it does not look very good for the type of claim you are making. Here are my notes on diminished value:

Also, this information is subject to newer analysis. You need to talk to a lawyer to help you interpret your policy and work with the insurance company.

Good Luck,

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