Auto Insurance and Diminished Value Claims

After a vehicle has been involved in an accident and repaired, its market value may not return to what it was before the damage occurred. Even if the repairs are completed to a high standard, the fact that the car has a history of damage can influence how much a buyer is willing to pay. This difference in value is known as diminished value, and it can become a point of concern for vehicle owners navigating the aftermath of a collision.

What Diminished Value Means for Vehicle Owners

There are different types of diminished value. Immediate diminished value occurs right after the accident, before any repairs are made. Inherent diminished value is the most discussed type and refers to the loss in value that remains even after quality repairs. Repair-related diminished value can result from substandard repairs or the use of nonoriginal parts.

For many drivers, the concern arises when they are not at fault in an accident and want to recover the difference in value from the responsible party’s insurance. Sometimes, a diminished value claim may be pursued to address this financial gap. However, the process and eligibility for such claims can vary depending on the state and the specifics of the policy involved.

Navigating the Claims Process

Filing a diminished value claim typically involves demonstrating that the vehicle has lost value due to the accident. This may require documentation such as repair records, appraisals and market comparisons. Some vehicle owners work with independent appraisers to support their claim, especially when the difference in value is significant.

Not all policies or situations allow for diminished value claims. In some states, these claims are only permitted when the other driver is at fault and their auto insurance is responsible for the damage. In others, the ability to recover diminished value may be limited or subject to specific conditions.

The vehicle’s age, mileage and condition before the accident can also influence whether a diminished value claim is viable. Newer vehicles with low mileage are more likely to experience a noticeable drop in value after an accident, while older vehicles may not show a significant difference.

Learn More

Contact Willis Insurance to find out what options are available in your situation. They can explain how your policy addresses this issue and what steps might be necessary if you decide to pursue a claim.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.