FAQs

Diminished value is the reduction in the resale value of a vehicle after it has been in an accident and then repaired. There are generally three types of diminished value:

1. Inherent Diminished Value: the reduction in resale value of a vehicle simply because it has a history of prior damage. It is based mainly on the consumer perception that even if a damaged vehicle is repaired to the best of human ability, the vehicle will never be the same as it was prior to the accident.
2. Repair Related Diminished Value: the additional reduction in resale value because of less than optimal repairs which make the vehicle less attractive to the consumer than if it had been thoroughly repaired.
3. Insurance Related Diminished Value: This is because the insurance company decided to use after-market replacement parts rather than using OEM (Original Equipment Manufacture) parts in order to save money on the cost of the repairs.

It depends. If prior to the accident the vehicle was in a good pre-loss condition, had no significant prior accident history, and suffered significant damage; then you certainly have a diminished value claim. But if the vehicle was older, had poorer pre-loss condition, and suffered minor damage; then you are less likely to have a diminished value claim.

The insurance company will pay to repair you vehicle to the condition it was in prior the collision, but even after optimal repairs, it still suffers damage to its marketability. There are companies, such as CARFAX, that make vehicle histories available to customers, dealers, and banks; and once your car has been in an accident the information can be easily discovered and used to reduce the value of your vehicle. You are entitled to be reimbursed for this loss in perceived value and it is almost impossible for an insurance company to deny a diminished value claim to an insured claimant.

The collection process will vary by each particular case along with the state within which the claim will be filed, but all the basics will still be the same. Initially you will need to find out how the damage has affected your vehicle’s value. Next, after you decide if the amount lost is worth pursuing, you need to obtain proper documentation of your loss to submit to the responsible party or insurance company. Also, a demand letter should be submitted along with the documentation to initiate negotiations with the insurance company to get the claim settled.

Your claim will be against the insurance company of the at-fault party. You cannot make a diminished value claim against your own insurance company (in most states). If you were responsible for causing the accident, you do not have a claim.

No. The vehicle now has suffered a loss in perceived market value. It will be harder for you to sell your vehicle for the same amount now that it has an accident on its historical record. In addition, no dealership will take it in as a trade-in for the same amount. Insurance companies have been trying to dodge paying Diminished Value claims for years, and they will make counterarguments in an attempt to justify their position. The principles of Diminished Value has long been recognized by law, but still the insurance industry will do whatever they can to avoid paying customers for this legitimate damage.

Each state has a statute of limitations regarding property damage. The average length is about four years, but you should CLICK HERE to see a list of all 50 states and their applicable statute of limitations time periods.

The vast majority of cases are settled without having to go to court. Occasionally you will encounter a stubborn insurance adjuster that waits until a court case is filed before offering a settlement.