Understanding Diminished Value Claims Example: Your one-year-old vehicle is worth $30,000. One day, you’re hit by another car, causing $5,000 in damage. Your insurance company pays for the repairs. Your car newly repaired car is still worth, $30,000 right? Wrong. Although your body shop does an excellent job, and your vehicle looks as good as it did before the accident, it’s now much less desirable having been in a collision, should you decide to sell it now, or down the road. Many times a frame or structurally damaged vehicle cannot be sold as a “certified used vehicle.” This will impact the vehicle’s value by as much as 40%! This is where diminished value comes in! Your insurance company will be quick to write you a check for the repairs, but you’re entitled to diminished value. If you list your vehicle for sale in the newspaper for $30,000, the first thing a buyer will ask is “Has the vehicle been in an accident?” Even if you didn’t disclose the accident, the buyer could still look up the history using Carfax. Once they discovered the accident, the buyer would no longer be willing to pay you $30,000, but instead might offer $22,000. In this case, the diminished value would be $8,000. $30,000 before accident -$22,000 sale price ————- $8,000 in diminished value! Even if you’ve already settled with the insurance company on the body damage, you can still file a separate diminished value claim if the repairs were done recently. Your claim for diminished value can be paid by your own insurance company or the other party’s company. ]]>
