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Diminished Value Explained

by Diminished Value Car Appraiser on December 12, 2014

The Difference in Value between a Wrecked and Repaired Vehicle and One that’s Never Been Wrecked. By Diminished Value of Georgia.diminishedvalue


The value of an automobile naturally depreciates over time and use. However when an accident occurs, a car suffers from diminished value, as the estimated worth of the vehicle plummets suddenly. While quality repairs can restore this to some extent, if you have two cars of equal age, make, and mileage, the one that has been involved in a major crash, even if fully restored, will have a significantly lower value than one which is in its original condition.


The diminished value of a vehicle that has been in an accident will be based on the original worth of the car, the severity of the crash, and the quality of the repairs or replacement parts which are used. With minor events causing cosmetic damage to ancillary parts such as bumpers or tail lights, repairs can often restore the automobile to such an extent that a professional will not be able to determine that an incident occurred.


With more serious damage, even the best repairs will not be able to restore the full value of the car, and will be obvious to any professional inspecting it. Major accidents will also be reported, which can become part of the automobile’s permanent history. However, high quality work and replacement parts can go a long way towards restoring some, if not all, of the overall value of the vehicle.


Types of Diminished Value


  • Inherent Diminished Value: This is the minimum amount of monetary worth that is lost to a vehicle when a significant collision occurs. Immediately after an accident, a car has its highest rate of diminished value. Subsequent repairs can then work to restore some of this, though the automobile will never achieve its original value.


  • Insurance Related Diminished Value: If the insurance company mandates the use of substandard parts, procedures, or labor in the repair of a vehicle then the value is diminished below what it would be if the work were done properly. It is generally less expensive to make quality repairs than to compensate for insurance related diminished value.


  • Repair Related Diminished Value: If the shop performing the repairs uses substandard parts, procedures, or makes a mistake, then the vehicle will have a lower value than if the work were done correctly. Generally the business that performed the work is liable to the owner for value lost due to these reasons.


Why This Is Important?


A vehicle that has a diminished value due to a history of one or more major collisions will not be able to sell for as much as one that has never had an incident. State law requires dealers to disclose any accidents that have occurred before selling a car, which means that they will question the previous owner meticulously when a trade in is made, and they may even require the signing of a legal affidavit to verify the truth of their claims.

In addition, the insurance company, or party responsible for the accident, will be liable for any diminished value to a vehicle. That is in addition to the cost of repairs and replacement parts. Many people accept an insurance company’s first claim amount offered because they do not understand the compensation for diminished value that is owed to them.


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