What is diminished value and will your insurance pay?
Updated: Aug 4, 2020
Diminished value is defined as the perceived loss in value of a car following a car accident due to the fact it was in an accident even after repairs have been done. Meaning, if you're car is damaged in an accident, even if it is repaired and is "good as new" because it has a damage history the resale value of the car will decrease.
There are three types of diminished value
Immediate Diminished Value - Difference in car value from before accident to after (when repairs have been done)
Inherent Diminished Value - Repaired to its original condition as closely as possible
Repair - Related Diminished Value - lost value due to low-quality repairs after an accident.
Why does a car have diminished value after an accident?
The reason for a car's diminished value is purely due to the fact that it has been in an accident. Once your car is listed for sale following an accident, you're facing a diminished value. repairing the car will not cover this loss in value.
What is a diminished value insurance claim?
A diminished value insurance claim is when you request an amount of money from your car insurance company to compensate you for the difference between your car's value before the repairs (prior t the accident) and its current value now that is has been repaired. This value can easily amount to a few thousand dollars for newer vehicles.
Will the insurance company pay for diminished value in my claim?
You may be able to get compensated for the diminished value following a claim, depending on the circumstances, and which state you are living in. Each state and insurance company has different policies. Insurance companies don't always pay for a vehicles diminished value but many consumers feel that it is the insurance company's responsibility to pay for a diminished value claim. Insurance companies in most states will consider who is responsible for the accident to decide if they will pay a diminished value.
How to make a diminished value claim
First you have to get an evaluation to determine the diminished value. Once you have your evaluation and you know how much you are going to claim for diminished value with all of the supporting documentation, you can present your case to the insurance company and ask for compensation when you file your claim.
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*All policies are a little different and this may not be applicable to your insurance policy, talk to your agent to see what your policy covers.*