The state of North Carolina has some of the most stringent accident damage disclosure laws in the nation. These laws apply to both individual sellers as well as car dealerships; which contributes to diminished value claims in North Carolina.
It starts with the vehicle title itself. On the backside of a North Carolina motor vehicle title is a section that asks if your vehicle has ever been involved in a collision or other incident where the repair costs exceed 25% of fair market value. If the answer is yes, you must check that box alerting any potential buyer of your car’s accident history. Ouch, checking that box will present some serious challenges when you go to sell your car.
In addition to the title disclosure, North Carolina also has damage disclosure laws that specifically pertain to cars less than five years old. Dealers and private party sellers of vehicles that are less than five years old are required by law to disclose any damage that’s over 25% of fair market value to the buyer IN WRITING. There’s no sweeping the accident under the rug, you’re required by law to tell the truth about it.
For example, if your car has a market value of $20,000, it only needs to suffer $5,000 of damage to be subject to the disclosure law. Disclosing your vehicle’s damage history will have a negative impact on its value since most buyers would choose a vehicle without an accident history over one that does. The accident history will scare off many potential buyers and those who do remain interested will demand a steep discount to assume the riskiness of a previously damaged vehicle. This loss of value due to the accident history is known as diminished value.
What you can do about a diminished value claim in North Carolina?
Fortunately, diminished value claims in North Carolina are widely accepted by courts and insurance companies. Insurance companies won’t voluntarily tell you about your right to be made whole for your vehicle’s lost value, you’ll have to demand compensation for it. That’s where DVCHECK comes in, we’re nationwide providers of diminished value appraisal reports that can help you document, demand, negotiate, and recover your car’s diminished value after an accident.
Occasionally, some insurance companies may try to deny your claim or offer you a very low amount based on a flawed formula. When you’re unable to reach a fair settlement with the insurance company, typically the next step would be to file a lawsuit against the at-fault driver in small claims court. However, North Carolina has an alternative to filing a lawsuit; it’s called the North Carolina third party appraisal clause (North Carolina General Statute 20-279.21).
Here’s how the North Carolina third party appraisal clause works
When you and the insurance company fail to agree on the amount of diminished value (the difference in market value before and after the accident) and that difference is greater than $2,000 or 25% of fair market value, either party can invoke the appraisal clause.
The appraisal clause plays out like this:
1. Either party makes a written demand invoking the appraisal clause.
2. Each selects a competent and disinterested appraiser. Meaning, you hire your own appraiser, and the insurance company hires their own appraiser.
3. The two appraisers then appraise your diminished value and attempt to reach an agreement on what the settlement amount should be. If they agree on a number; the appraisal clause is over and the insurance company will send you a check for the agreed upon amount.
4. If the appraisers fail to agree, an umpire is then selected. The umpire will review the claim and prepare a report to decide on the final diminished value amount. The umpire’s decision can’t be any higher or any lower than what the two appraisers stated in their appraisals. It will fall somewhere in between.
5. The appraisal clause is nonbinding, meaning either you or the insurance company can reject the final outcome within 15 days.
As you can see, the appraisal clause is a consumer friendly statute that offers an attractive alternative to filing suit. The combination of the title disclosure, 25% damage disclosure, and third party appraisal clause makes North Carolina a popular state for diminished value claims.
If you’ve had an accident within the past three years that wasn’t your fault, please contact us for a free diminished value estimate and find out how much you could be owed in addition to the cost of repairs.