What is a Car Diminished Value Claim?

As mentioned above, when your car is involved in an accident, repairing the vehicle can only restore its appearance and performance, not its market value. The loss of market value caused by the damage is diminished value. In many cases car owners file a claim against the insurance company to recoup the estimated lost value. This is a diminished value claim. 

Types of Diminished Value

Diminished value is divided into 3 different categories, depending on the vehicle’s condition. 

Immediate Diminished Value

Immediate diminished value is the loss in your car’s market value right after its accident and before repairs. Suppose your car was worth $120,000, and after its accident, its market value dropped to $90,000. Then your car lost $30,000 of its market value, and this is its diminished value.

Inherent Diminished Value

Inherent diminished value is the lost market value that is not restored, even after your car has been repaired. Suppose your $120,000 car was worth $90,000 immediately after the accident. If you repair the vehicle, it will look new, but its value still won’t be the same. It might go up to $110,000 after being repaired. The remaining $10,000, which wasn’t restored after your car was repaired, is inherent diminished value.

Repair-Related Diminished Value

If you repair your car with poor-quality parts, this causes additional loss of value for the vehicle. The extra lost value is called “repair-related diminished value.” Suppose your car’s value was $90,000 after an accident, and if you have it repaired with poor-quality parts, its value might drop to $70,000. This additional $20,000 loss is considered repair-related diminished value.

Who Can File a Claim?

You can file a diminished value claim in the following situations.

Not At Fault

Generally, you can file a diminished value claim only against the at-fault driver’s insurance. 

Own Policy Exception

You can’t file a claim against your own insurer if you are at fault, unless you live in Georgia or have a specific uninsured motorist coverage that allows it.

Vehicle Age/Condition

Insurance claims are acceptable for newer cars with lower mileage and no prior accident history.