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What Is a Diminished Value Claim Appraisal? A Complete Guide for Car Owners
What Is a Diminished Value Claim Appraisal? A Complete Guide for Car Owners
Think about a situation where your prized car was involved in a major accident and was badly damaged. You took it to a reputable auto repair service and had it fixed to its condition before the accident. Now, you are trying to sell or trade it, but dealers are offering thousands less than similar vehicles without accident history. This difference represents diminished value, a real financial loss that car owners should get compensated for.
A diminished value claim appraisal can help recover the lost value of your car from the insurance company. However, many car owners aren’t aware of this claim. That is why we write this blog. We will begin our journey by first learning about diminished value and then sharing what the claim is.
Diminished Value Explained
Diminished Value Explained
When your car meets with an accident, its market value drops. A drop in a vehicle’s market value after an accident is called diminished value. In other words, it’s the difference in your car’s market value before and after the accident. For instance, if your car is worth $30,000 and after an accident its market value drops to $27,000. Then, $30,000 - $27,000 = $3,000 is its diminished value.
Types of Diminished Value Claim
Types of Diminished Value Claim
A vehicle can have 3 diminished values after being involved in an accident: immediate, inherent, and repair-related diminished value. Learn about them from the following section.
Immediate Diminished Value
Immediate Diminished Value
Immediate diminished value refers to the difference between a car’s market value right after it’s involved in an accident and its market value before the accident. Remember that the vehicle is not yet repaired at this time. If your car is worth $30,000 and its market value drops to $27,000 after an accident, the remaining $3,000 is the immediate diminished value.
Inherent Diminished Value
Inherent Diminished Value
If your car meets with an accident, you can have it repaired with either substantial or high-quality parts. Suppose you choose OEM (original equipment manufacturer) and your vehicle is restored to its pre-accident condition. Its market value will remain lower than the value before the accident.
The difference between the car’s market value before the accident and after repairs is its inherent diminished value. Suppose your car is worth $30,000 and meets with an accident. If you have it repaired with high-quality parts, its value is $28,000. Then, $2,000 is the inherent diminished value.
Repair-Related Diminished Value
Repair-Related Diminished Value
The difference in your car’s market value after the accident and after repairs is called repair-related diminished value. After an accident, if you repair your car with substantial parts, this can cause additional loss of value. Suppose your car is $27,000 after an accident; its value might drop to $26,000 after repairs. Then, the difference of $2,000 represents the repair-related diminished value.
What is a Diminished Value Claim?
What is a Diminished Value Claim?
Drivers can make a claim with the offender's insurance company, the at-fault driver, when they submit a diminished value claim. Additionally, if your car is collided with a hit-and-run driver or is stolen, you may submit a claim to your insurer.
You've learned about diminished value claims and if you're having trouble filing one, we can help. We're ADR Claims; a team of professional appraisers who will assist you throughout the insurance claim process and help ensure that you receive a fair settlement for your vehicle that was damaged by an accident.
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