Diminished value refers to the loss in market value of a vehicle after it has been involved in an accident and subsequently repaired. Even if the repairs are expertly done, the vehicle’s market value will rarely return to what it was before the accident. This term is primarily used in the context of vehicles but can also apply to other property, such as real estate or collectibles.
The concept of diminished value is distinct from depreciation. Depreciation refers to the gradual decrease in a vehicle’s value over time due to normal wear and tear. In contrast, diminished value occurs suddenly and unexpectedly as a result of an accident, regardless of how well the vehicle is repaired.
A diminished value claim is a legal process used to recover the difference between your vehicle’s value before the accident and its value after repairs. For example, when you attempt to sell or trade in your car, its accident history will often appear on vehicle history reports like Carfax or AutoCheck. Buyers and dealers may use this history to justify offering less than the market value, even if the car looks and performs as if it were never damaged.
Consider the scenario of purchasing a new luxury vehicle for $45,000. If the car is rear-ended a few months later, the at-fault driver’s insurance may cover the cost of repairs. However, the vehicle’s value could still drop by thousands of dollars due to the accident history. This means that when you eventually try to sell or trade in the car, you may lose out on significant resale value, simply because the car was in an accident through no fault of your own.
Diminished value claims are processed separately from liability claims, which address repair costs and medical expenses. Filing a diminished value claim can help you recover the financial loss caused by the accident’s impact on your vehicle’s market value.
If you’ve been in an accident and suspect your vehicle has lost value despite being repaired, consulting with an experienced attorney or appraiser can help you determine the extent of the loss and guide you through the claims process. This ensures you are fairly compensated for the true impact of the accident on your property.
