25 Jan What is Diminished Value?
Diminished value is the perceived loss in value of a car following an accident due to the fact it was in a wreck, even after repairs have taken place. What this means is that if your vehicle is damaged in a car accident, regardless if it gets fixed and is “as good as new,” the fact that it has a history of accidents will make its resale value lower in the eyes of prospective buyers.
The issue of diminished value is debated among insurance companies, lawyers, state courts, consumers, auto parts manufacturers, and auto repair shops. Supporters of the diminishing value theory say that these losses are, in fact, real and should be reimbursed under an insurance policy whenever there is accidental damage to a covered car. Others say that such losses are similar to depreciation and were never intended to be covered in the first place.
3 Types of Diminished Value
Immediate Diminished Value – The immediate diminished value is the difference in the resale or trade-in value of the car from before the accident to after the crash when repairs have been done.
Inherent Diminished Value – Inherent diminished value assumes the vehicle has been repaired following an accident to its original condition, except for the fact that it is now considered as a vehicle that has been in a crash.
Repair Related Diminished Value – Repair-related diminished value is the lost value that results specifically from the quality of repairs, for example, if the paint color is not a perfect match.
Depending upon the age and value of your cars, you may have a concern over this issue. If you do, your best bet is to discuss your situation with an understanding insurance professional at AWS. We can help you find out what coverage options may be available and understand what your policy offers.