Auto diminished value refers to the depreciated worth of a car due to accident damage. Once a car suffers damage that requires paint and bodywork, the resale value of the car declines, and the difference between what a car is worth before and after cosmetic repairs are made can amount to thousands of dollars.
Insurance companies are reluctant to pay out additional claims beyond the repair costs. Yet no matter how carefully a body shop restores a wrecked vehicle to original condition, once car dealers and consumers discover a collision report has been made on the car, the resale value drops. Even without a collision report, most used car dealers can spot repainted fenders or doors.
After a body shop repairs a damaged car, the owner should take action immediately to recover the diminished value loss. The first step is to establish the value of the car before and after the repair. Take the car to a dealership that sells that particular make and model. Ask the dealer if your car has any remaining loan value; which means the car can be financed if resold. (Loan value usually applies to cars less than 6 years old.)
Tell the dealer about the damage and the extent of repairs and request a written appraisal of your vehicle’s retail value. Next, ask the dealer for an estimated retail value for the same model in “original” or “clean” condition with similar mileage. The difference between the two estimates is the diminished value upon which the owner can base a loss of value claim. Getting more than one auto value appraisal is a good idea, too.
Contact the insurance company that paid the property damage claim and inform the representative that you have documented loss of value on your car. Usually, the insurance company will deny liability for diminished loss claims. However, in most states, insurance companies are obligated to pay claims based on what property is actually worth rather than what an adjuster estimates. Insurance companies are supposed to make a claimant whole, not settle for the least possible amount.
Classic, antique and custom vehicles are more difficult to appraise because comparative values are harder to find. Still, car clubs and specialty automotive publications can provide information on what old or unusual models are worth. Repairs on antique and collectible cars can be very expensive indeed; likewise, the diminished value estimate on a classic automobile is very high.
Relatively few people make diminished value claims after their car is repaired and back on the road. Too bad, because when the time comes to trade the car in, the reduced value indicated by the collision report or by visual inspection of the bodywork means less money applied to the purchase of a new car.
The reason so few people take advantage of diminished value claims is because insurance companies can be intimidating. A lot of people feel relieved to get any settlement at all, so most avoid trying to haggle with insurance agents and adjusters. Lawsuits to settle loss of value cases are rare because attorneys don’t make big fees off property damage cases.
Fortunately, there are companies which negotiate diminished value claims for a fee or percentage of the settlement. These claims can be pursued months, even years, after the damage claim has been paid.