What is Diminished Value?

Diminished Value is defined as that portion of a damaged vehicle’s pre-Loss Value that has not been restored through the repair process.

An example of this is to imagine that you had a vehicle that was worth “X” amount of dollars on one day. The next day, someone crashes into your vehicle causing damages. You make a claim with the negligent party’s insurance company and are compensated for the full cost of repairs needed. After the repairs, your car looks great. You can’t even tell that it’s been in an accident. But it’s no longer worth the “X” amount of dollars it was just a week ago, right before the accident occurred.

Just the fact that it’s been in an accident is enough to lower the value of your vehicle.

After an accident* and after repairs, you may still be owed money.

*If you were not at fault.

You should have been due not only the cost of the repairs, but also the diminished value of your vehicle because the vehicle is worth less now than it was pre-accident, even after the damage has been repaired.

Through no fault of your own, you will not be able to sell your vehicle for what you could have if it had not been in an accident.

The 3 Basic Types of Diminished Value

1. Immediate Diminished Value

Immediate Diminished Value is the difference in resale value of a vehicle immediately before damage has occurred and immediately after damage has occurred (prior to repair). Most jurisdictions (courts) will use this standard as the primary measure of damage when courts are employed to seek reimbursement for damage from a negligent party.

As courts are rarely the chosen venue for recovery of property damage, the standard of “Immediate Diminished Value” is rarely employed in resolving Property Damage claims …

2. Inherent Diminished Value

Inherent Diminished Value assumes optimal repair quality has been achieved and is defined as the amount by which the resale value of a repaired vehicle has been reduced simply because the subject vehicle now has a significant damage history.

“Inherent Diminished Value” is the most widely recognized and accepted form of Diminished Value.It is also the basis upon which any supplemental form of Diminished Value would be added. A common “Supplemental” form of Diminished Value is “Repair Related Diminished Value” …

3. Repair Related Diminished Value

Repair Related Diminished Value includes any additional amounts by which the resale value of a subject vehicle may be further reduced because of less-than-optimal repairs. This could include anything from minor cosmetic imperfections to major structural defects.