Our attornyes are investigating whether car insurance companies have failed to appropriately decrease their insureds’ collision premiums to reflect the depreciated value of their insureds’ vehicles with the passage of time. It is believed that, for years, car insurance companies have provided insurance coverage to consumers and have not decreased the insured’s annual collision premiums to reflect the depreciated value of the insured’s vehicle. The Insured Declared Value (“IDV”) is the maximum amount that the car insurance company would have to pay in the event of a complete write off after an accident.
The IDV could be equivalent to the market price of a new vehicle as it is driven out of the showroom, but the IDV comes down with each passing year as the vehicle grows older and further depreciates. For example, if you drive a 2010 Honda Accord, had you gotten into an accident requiring the total replacement of your vehicle in 2010, your insurance carrier may have paid you the MSRP or approximately $22,000. If, however, you get into an accident in 2012 requiring the total replacement of the same 2010 Honda Accord, your insurance carrier will now pay you the IDV, which will be 30% less than the MSRP, or, concretely, $15,400. In other words, if your insurance carrier did not appropriately adjust your collision premium, you may be paying the same amount of collision insurance, for $6,600 less of coverage.
As such, if a vehicle’s insurance premium is not decreased to reflect the decrease in the insurance coverage and depreciation in the value of the car, the insured is paying too much for car insurance and the insurance company is pocketing a windfall in profit. If you have maintained collision coverage for more than one year with the same insurance carrier for the same vehicle and have not received a decrease in your collision premium, please contact us to discuss your rights.