How the Auto Diminished Value Is Calculated

• Posted on Autos.com Editor
• in Car Buying
• on October 7, 2013

When your car is in a wreck, and you want a fair compensation from your insurance company, you many want to look into an “auto diminished value” for your vehicle. The diminished value of a vehicle is the difference between what it was worth before the accident and what it is worth after it has been refurbished.

But getting a diminished value estimate is not that simple. The basis of an auto’s value is its worth to a buyer, and like a home value, auto values can fluctuate based on some abstract factors. An auto value appraisal needs to be as specific as possible in order to establish that the value has been significantly diminished by the accident; even after all of the body work and repairs are done.

So how does a car owner get a car value appraisal that will make an insurance company pay up? Well, first of all, lots of insurance companies let customers know flat out that their chances of getting paid for diminished auto value are slim to none. This is because the diminished value also has to do with when an owner chooses to sell. If the owner of the car wants to sell immediately after the accident, the diminished value will be greater than if he or she waits a few years.

But, as wrecked car owners argue, the stigma of an accident can follow a car for years, and getting a fair price for it can be difficult. So, there are a few things that can add up to more concrete diminished value claims.

A dealer can help, by estimating their own trade in value after the accident. This is an indication of what the reasonable value of the car would be. Another way is to use a Kelly Blue Book value. If the condition of the car has been changed (say, from excellent to fair), this can be used as the basis for a diminished value. A dedicated auto appraiser can also help out by doing a battery of inspections for a multi-point value estimate that can hold up in court, if the insurance company steadfastly refuses to consider diminished value.

So, when dealing with an insurance company that doesn’t want to assess a damaged car correctly, having professionals on your side can help.