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What is Diminished Value?

Diminished value means a vehicle that is properly repaired following an accident may be worth less than it was immediately before an accident. This diminished value can be inherent and is often contingent upon a number of factors.

The factors that usually dictate whether there is a diminished value on the vehicle and how much that loss will be include the age of the vehicle, its condition before the accident, prior accidents, the mileage, the extent of the damage done in the questioned accident, the value of the vehicle undamaged and the overall demand for the vehicle in the marketplace.

Someone is not likely to pay less for a 1995 Chevy Pickup that has been involved in a minor fender bender than an identical make model vehicle that has not. Though due to a perception of diminished value, nearly any consumer if given the choice between a frame-damaged though properly repaired 2005 BMW or one that has never been involved in accident if they are priced the same; the choice would be unanimous for the non-blemished vehicle.

The question becomes how much is the loss? Determining the value of the loss is based purely upon supply and demand economics. Does the damaged vehicle have to be 10% less, 20% or more for the consumer demand to be equal? Unfortunately, every car is different and thus calculating the loss is not something that one can open a book or look up on some website. Rather an expert that has full understanding of the marketplace for damaged and repaired vs. undamaged vehicles is often required to help determine the diminished value. A general rule of thumb for vehicles that are 2001 model or newer with no prior damage and with at least several thousand dollars worth of repairs is that the vehicle loses in the range of 10-25% of its pre-loss value.

In nearly every state the victim of an automobile accident may be able to pursue a claim for diminished value against a third party/third party insurer. The claim is ripe for presentation immediately after the vehicle has been repaired to industry standard and the Statute of Limitation in most states for presenting a claim is the same as for any other property damage/personal injury claim.