What Really is Diminished Value?
You've been in an auto accident - You now have a claim for collision damage - You may also have a claim for Diminished Value - Diminished Value is the amount by which the resale value of a damaged (or damage repaired) vehicle has been reduced for having a significant damage history. There are actually three (3) broadly accepted types of Diminished Value . . .
INHERENT DIMINISHED VALUE:
Inherent D.V. can best be described as the automatic and unavoidable loss of market value simply due to the fact that the vehicle has been involved in an accident. Given the disclosure laws, in many cases it is mandatory that previous damage be disclosed, (made known), to a prospective buyer. Think of it this way: You wouldn't be willing to pay as much for a vehicle that was damaged as you would for one that had never been repaired, would you? The difference in the amount you'd be willing to pay for an undamaged automobile versus the price you'd be willing to pay for one that has been repaired would be considered "Inherent Diminished Value".
REPAIR RELATED DIMINISHED VALUE:
Repair Related D.V. can best be described as the loss of market value due to the fact that the repair facility performed improper and incomplete repairs to your vehicle during the repair process. These are items that are listed on the Repair Order of record and are either not completed and/or completed improperly. This type of diminished value will not only decrease the value of your automobile, but in many cases effect the safety and drivability of your vehicle.
INSURANCE RELATED DIMINISHED VALUE:
Insurance Related D.V. can best be described as the loss of value due to the insurer’s failure to indemnify the consumer for items and procedures owed under the contract of insurance. In many cases it is to your advantage that you review and understand your policy provisions before you begin the repair process to your vehicle. Also you should be aware of the use of terms such as "Quality Replacement Parts", "Quality Recycled Parts", "Industry Standards" and you should ask questions if you do not understand the "Estimate Of Record". You must also understand that some insurance policies with your authorization allow the insurers to actually take control of your vehicle at a Direct Repair Shop (DRP).
Frequently Asked Questions
1. The insurance company says the vehicle was repaired properly and has thus not suffered diminished value, is that true?
Most certainly not. The insurance company is telling you that because they do not want to have to pay the claim. An inherent diminished value claim is based upon a vehicle being properly repaired. The vehicle is still worth less because it is not what it was before the accident. A brand new vehicle is not made brand new again by repairing it following an accident.
2. The insurance company says the state law doesn't allow a claim for diminished value. Is this true?
No again. Insurance companies have tried avoiding paying on these claims for years and they do and say whatever will justify their position. Diminished value and case law supporting the same has been around for nearly 100 years.
3. My vehicle is more than five years old do I still have claim?
Maybe. Typically, vehicles that are less than five years old without prior damage and a decent amount of damage in the subject accident qualify. Any brand new vehicle with any damage no matter how small may qualify and any vintage vehicle or collector's car with any damage may as well. There are exceptions and recently we have seen several thousand dollars for diminished value paid on vehicles as old as 1997. (Vintage vehicles much older can also suffer diminished value.)
4. Do I really need to hire an expert to present a claim?
Yes. Without a qualified post-repair inspector you will not have substantiated the claim. As the claimant you have the duty in most states to prove any claim you make and that includes diminished value.
5. Do I need an attorney?
Maybe. A claimant is no threat to the insurance company. The thing that most often prompts settlement of any claim including that of diminished value is the threat of litigation. Litigation costs insurance companies money. To avoid the expense they may be willing to settle. Without the threat of suit they will offer what they want. You may want to try it on your own. Every insurance company is different.
6. What costs will be involved on my end?
Collision Damage Consultants work on a onetime fee for each service. A phone call to Collision Damage Consultants cost nothing and the consultation is free as well.
7. Does my vehicle need to be inspected?
An inherent loss of resale value claim does not necessarily require an inspection. Implicit in the claim is that the vehicle has been repaired properly and meets industry standards. How does a post-repair expert know if the vehicle has been repaired to industry standard though if the vehicle has not been inspected? Collision Damage Consultants has extensive knowledge in the collision repair industry. We hold a Certificate in Damage Analysis and Estimating from ASE.
8. What if the post repair expert finds poor repairs or work that was never performed that should have been?
Though every case is different we recommend giving the shop that did the original repairs the opportunity to right the wrong. You may have a claim for repair related diminished value in addition to the inherent loss if the car is not eventually repaired properly.
9. What if I want to keep my vehicle, do I still have a claim?
Many insurance carriers will argue no. They will say that you have not suffered a loss. The question is a matter of proof. Do you have evidence of the loss? If your post-repair expert has done a good job documenting why the vehicle is worth less you should be able to get paid on the claim.
10. What is a buyback offer?
Trying to trade in or sell your vehicle at a dealership. It is testing the marketplace for the value of your depreciated vehicle.
11. Should I get buy back offers?
We recommend doing so. When and if you do so, make sure to disclose the extent of the repairs performed. Ask the salesman to tell you what he would have paid for the vehicle if it hadn't been involved in an accident. Ask him to put both quotes in writing. We suggest getting a minimum of two buy bids one from a dealer that sells your make of vehicle and one from Carmax. First buy bid should be from a dealer that sells your make of vehicle so that they can tell you if it can be sold as a certified used car. We recommend Carmax (if there is one in your area) as a second buy bid choice due to their extensive research and thoroughness that they perform before they make a buy bid offer.
12. What if the person that caused the accident doesn’t have any automobile insurance?
The claim against that individual likely still exists, though the ability to collect may be very difficult. Most people that do not carry automobile insurance do not have the means to pay on any claim including that of diminished value. You still may be able to collect depending on your auto policy under uninsured/underinsured motorist coverage. It just depends on how the policy is written.
13. Policy Limit Issues?
If the at-Fault party’s insurance has only Statutory "Minimum" Property Damage Liability Limits, there may be an issue about sufficient funds being available (from their insurance company) to pay Both the cost of repair And the Diminished Value to your vehicle. If this is an issue (and you have Collision coverage available to you) we can show you how to Blend these Two Resources to increase your opportunity to be Made Whole. Under the Federal "Make Whole" doctrine, your Right to be Made Whole is superior to your insurance company’s right of subrogation. However, timely action is required to perfect Your Rights under the "Make Whole" doctrine. The sooner you get Collision Damage Consultants involved in your Diminished Value Claim, the less likely Policy Limit Issues will "Short Change" your recovery.
14. What is Colorado’s statute of limitation on property damage from an auto accident?
State law states three years from the date of loss.