Diminished Value: A Loss You Should be Compensated For

Diminished Value: 

When people have been in an auto accident and their vehicle has sustained damages, normally that is the first concern. If you’re like most people, you need transportation, and when your vehicle is wrecked or damaged, it’s usually a headache to deal with. 

You may need to get to and from work, bring kids to school, or get groceries. We heavily rely on our vehicles. When our vehicles are damaged in a wreck, they can be repaired or they can be considered a total loss. If your vehicle has been involved in a wreck and it sustained damage but is not a total loss, the at-fault driver likely owes you what we call “diminished value.”

What Is Diminished Value?:

What is diminished value? Diminished value is the difference between the pre-loss value and the post-loss value of a vehicle after a collision. Generally, the proper measure of monetary loss is the difference between the pre-loss fair market value of the vehicle and the post-loss fair market value of the vehicle.

Diminished value is not determined at some future date. Nor does it require you to sell your vehicle. Rather, it is designed to compensate you, and you are owed diminished value even if you decide to keep your vehicle after it has been repaired. You are not required to sell your vehicle to make a diminished value claim. Diminished value is the automatic loss in value from a collision. 

Almost every vehicle that has been in a wreck will have some form of inherent diminished value. It has been estimated that 55% of consumers would not buy a car that had been in an accident and 81% would not have a car that had been in a wreck unless they were given a large discount. However, survey results from appraisal experts show the stigma may be even higher than reported. 

How Diminished Value Is Calculated:

How do you calculate diminished value? There are many factors to take into account when determining diminished value. These factors, include but are not limited to: 

1. Year, make and model of the vehicle; 
2. Type of damages and the extent of the damages incurred to the vehicle; 
3. The mileage at the time of the wreck; 
4. Whether the vehicle has been in any other prior accidents and the extent of the damage the vehicle incurred in those accidents; and 
5. Comparable vehicle pricing 

Considerations are given to concerns which a buyer may have if you were to sell your vehicle. For example, if the buyer knew the vehicle was in a severe accident, it is likely the buyer would be willing to pay less for the vehicle. This is what we mean when we say diminished value. 

How Diminished Value Works in the Real World:

It is commonly known auto body damage will permanently and severely stigmatize all newer vehicles. After your vehicle has been in an accident and has been repaired, this will likely show up on a Car Fax/Wreck check. These type of reports may not identify the extent of the accident/repairs stigmatizing the vehicle. How does this come into play in the real world?

Experts have found the largest resale market is the dealer trade in-market. Once the vehicle has been inspected by the dealer for a trade-in value, the dealer will likely be able to notice numerous things including that when a vehicle is manufactured the vehicle is installed with vehicle identification numbers on the majority of the body parts. In addition, vehicles with structural and/or auto body related damage usually cannot be resold as a “Certified Use” or “Certified Pre-Owned” vehicle and thus affects what a dealer is willing to pay you for it. 

Click here to read our article on more information about how a wreck can affect the value of your vehicle (insert hyperlink to other blog post: How a Wreck Can Affect the Value of Your Vehicle)

How Salter Law Gets the Most for Diminished Value Claims:

I do not handle diminished value claims alone. However, I do always handle diminished value claims for my clients who are injured. This often goes hand in hand because my clients get injured in car accidents and then their vehicles need to be repaired.

When I make a diminished value claim on behalf of my clients, I always engage an expert. There are many certified appraisers who can issue reports which will help to bolster your diminished value claim. I also work with the insurance company to make sure you are fairly compensated for your diminished value claim. To do that, I must have all repair records from the body shop including the costs of repairs and photographs of the damage to your vehicle. 

If you were injured in a wreck in Louisiana, contact Salter Law today for a free consultation to discuss your injuries and potential diminished value claim.