Diminished Value is the loss in market value of a vehicle after damages are caused by an accident. As soon as a vehicle is involved in an accident, the market value of the car decreases even if the damages are fully repaired. Why is this? A vehicle’s value decreases after an accident because consumer’s perception of the vehicle’s value decreases. In many cases, the car has been fully repaired after an accident and yet the value of the car is still less than before the car was involved in an accident. To earn back the diminished value of a vehicle, consumers should complete a diminished value claim with their insurance company.
Just because you’ve been in an accident does not mean that you are automatically entitled to a diminished value claim. Diminished value claims are determined based on the circumstances, the state, and the insurance policy.
Here are a few examples that may qualify you for a diminished value claim:
Inherent Diminished Value describes a vehicle’s loss of value even after repairs have been made to restore the vehicle to its original condition. This type of diminished value occurs when the vehicle loses value simply because it now has a damage history. Inherent Diminished Value is the most common type of diminished value claim.
Immediate Diminished Value is calculated as the difference in resale value of a vehicle immediately before and after an accident. This is the most common type of diminished value used in court systems but is rarely used elsewhere.
Repair-Related Diminished Value refers to the loss in vehicle value based on the quality of repairs made after an accident. This type of diminished value assumes that the vehicle is not able to fully repaired to its original condition after an accident.
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