Understanding Diminished Value:
Diminished value refers to the decrease in your vehicle's worth following an accident, even after repairs have been completed. Unlike depreciation, which is expected and considered a natural decline in value over time, diminished value stems from specific events like collisions, resulting in significant damage.
Do You Qualify for a Diminished Value Claim?
Following a not-at-fault accident, the insurance company may owe you for Inherent Diminished Value; the loss in value of your vehicle due to a reportable accident. Sometimes, the Inherent Diminished Value can be as much as 50% of your vehicle’s value.
If your car meets the criteria for a diminished value, you might be eligible for compensation. However, securing the maximum entitled value from an insurance company can be challenging. To determine eligibility, it's essential to assess the extent of damage and the quality of repairs. Our team at Collision Claims Advisors specializes in evaluating whether your vehicle qualifies for a diminished value claim, and we can guide you through the claims process effectively.
Contact us today for personalized assistance.
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Types of Diminished Value
Diminished value refers to the loss in a vehicle's market value after it has been involved in an accident and repaired, compared to its value prior to the accident. Even if the vehicle is restored to a condition that is as good as or better than before the accident, potential buyers may still perceive it as less valuable because it has a history of damage. Diminished value can be a significant factor in the resale or trade-in value of a vehicle, and it is often a point of consideration in insurance claims and settlements following an accident. However, there are three main types of diminished value: immediate, inherent, and repair-related. And although inherent is the most popular, it’s important to understand all three.
Immediate Diminished Value:
Immediate diminished value represents the worth of your car immediately following an accident and before any repairs are made. While this type is acknowledged by the court systems, it is seldom used by insurance companies since most vehicles undergo repairs post-accident. Depending on the accident circumstances, your insurance company may cover the cost of repairs.
Inherent Diminished Value:
Inherent diminished value refers to the reduction in a vehicle's market value that occurs simply because it has a history of being involved in an accident, even if the repairs are done perfectly and the vehicle is restored to its original condition. This type of diminished value arises from the stigma associated with the accident, as potential buyers may still view the vehicle as less desirable or more risky than a comparable vehicle without a history of damage. Inherent diminished value is the most common type of diminished value and is often considered in insurance claims after an accident.
Repair-Related Diminished Value:
Repair-related diminished value refers to the reduction in a vehicle's market value due to the quality or completeness of the repairs performed after an accident. This type of diminished value occurs when the repairs are not done to the highest standard. For example, the use of aftermarket parts instead of genuine or original equipment manufacturer (OEM) parts, or from low-quality repairs resulting in issues such as mismatched paint, poor alignment, or remaining structural problems. Although there are some rare circumstances where it might be recoverable, repair-related diminished value is typically not covered by insurance, and is usually an issue that must be addressed with the original repair facility.
Contact one of our Experts
Understandably, each situation is a bit unique and you likely have many questions, and perhaps feel overwhelmed. That’s okay, we are here to help. Feel free to reach out via email with any questions you may have, or if you prefer, you can schedule a free consultation call below. One of our advisors will be happy to assist you.
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