IMAGINE PUTTING 2 VEHICLES SIDE BY SIDE FOR SALE. BOTH VEHICLES ARE IDENTICAL IN COLOR MAKE MODEL AND OPTIONS AND MILEAGE. ONE VEHICLE HAS NEVER BEEN DAMAGED THE OTHER HAS HAD IN EXCESS OF $5000.00 DOLLARS WORTH OF COLLISION REPAIRS DONE TO IT. WHICH VEHICLE ARE YOU MORE LIKELY TO BUY??? WHICH VEHICLE ARE YOU MORE LIKELY TO PAY RETAIL FOR???
What is Diminished Value?
Diminished Value is the loss in value to your asset due its change in state from a non-damaged vehicle to a damaged repaired vehicle. Any vehicle incurring damage can also incur diminution in its market value.
When does Diminished Value occur?
Diminished Value occurs at the time that the asset is damaged. Although you may be told that you dont sustain a diminution in value until you sell your vehicle this is absolutely not true. Your asset has a fair market value before it sustained damages and its fair market value is most certainly reduced after it has been involved in an accident. It is very likely that the asset has lost value due to the damage and the amount can be projected without the forced sale of the vehicle. If the vehicle will be sold it is important to follow state disclosure laws as to limit any liability you may have for the repaired vehicle.
Insurance related diminished value could also occur. This occurs at the time of repair and is based on the quality of the offer made to you by the insurance company at the time of repairs. If the insurer refuses to pay for necessary procedures and materials needed to repair the vehicle to its pre-accident state then any items not repaired or incorrectly repaired on the vehicle could cause insurer related Diminished value.
Repairer related diminished value could also happen at the time of the repair. Any items not repaired correctly but paid for by you the consumer could result in repairer related diminished value. We suggest repairers document all requests for payment of proper repairs so as to minimize their liability for the repairs that are not completed properly to the vehicle.