What is Diminished Value?
In a nutshell, diminished value refers to the loss of value a vehicle experiences after it has been involved in an accident, even after it has been fully repaired.
Imagine this scenario: You are in the market for a used car, and you come across two nearly identical vehicles. When you check the Carfax on both vehicles, you learn that one of them has been involved in a previous accident.
Even though the vehicle has been repaired and still has a “clean” title, would you choose the vehicle with no accident history or the vehicle with an accident history? Naturally, you would expect to pay less for the vehicle that has a history of accidents, as it is perceived to have a diminished value.
There are many reasons why vehicles with an accident history are worth less – it is possible that the repairs were not performed correctly, there could have been structural damage that could manifest itself after many miles, inferior aftermarket parts could have been used, the body panel or panels that were painted could age and fade at different rates than the other panels, etc
Types of Diminished Value
There are three main types of diminished value:
- Inherent Diminished Value: This refers to the loss in value due to the fact that the vehicle has a history of accidents, regardless of the quality of repairs.
- Repair-Related Diminished Value: This occurs when the repairs made to the vehicle are not up to the same standard as the original manufacturer’s specifications.
- Immediate Diminished Value: This is the loss in value that occurs immediately after an accident, before any repairs have been made.
Making a Diminished Value Claim
If you believe that your vehicle has suffered from diminished value due to an accident, you may be eligible to make a diminished value claim. Here are the steps to follow:
1. Gather Evidence
Start by collecting all the necessary evidence to support your claim. This may include photographs of the accident, repair invoices, and any other relevant documentation.
2. Determine the Value of Your Vehicle
Before making a claim, it’s important to determine the value of your vehicle both before and after the accident. Fair Auto Appraisals LLC performs diminished value vehicle appraisals that include the following information:
- An inspection of your vehicle or photo review to document options, condition and completion of repairs.
- A detailed review and analysis of your final repair documentation.
- A description of what happens to a damaged & repaired vehicle in the marketplace.
- A description of the type & extent of damage to your vehicle, including identification of structural, suspension and safety related components.
- A determination of the pre-damage value of your vehicle.
- A determination of the post-repair value of your vehicle.
- A determination of the diminished value of your vehicle.
- A listing of the background, experience and certifications of the appraiser who wrote the report.
- A professionally written report that complies with USPAP (Uniform Standards of Professional Appraisal Practice).
- Detailed instructions, sample claim demand letter and ongoing technical support
3. Submit Your Claim
With all of the evidence that you have gathered, it’s time to submit your claim. Be sure to include all relevant information and documentation to support your case.
4. Negotiate or Seek Legal Action
After submitting your claim, the insurance company may offer you a settlement. If you believe the offer is unfair, you have the option to negotiate or seek legal action. An attorney can assist you in this process and help you fight for the compensation you deserve.
Conclusion
Diminished value is an important concept to understand when it comes to assessing the value of a vehicle after an accident. By recognizing the different types of diminished value and following the necessary steps to make a claim, you can protect yourself and ensure that you are fairly compensated for any loss in value your vehicle may have experienced.