What is Diminished Value?
Know your rights if you’ve been in an auto accident. You may be entitled to a check from your insurance company for a Diminished Value claim. Diminished value is the automatic loss of value from a auto 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 auto accident. 81% would not have a car that had been in a wreck unless they were given a large discount. Our survey results show the stigma may be even higher.
Diminished Value isn’t something insurance companies generally acknowledge your right to recover!
In their online article about diminished value (later removed from State Farm’s website) “Diminished value fact or fiction?” State Farm has tried to discourage consumers from attempting to file a diminished value claim. We disagree. Many times claimants are not made aware of compensation for diminished value. Insurance companies would have you believe they are your advocates when in reality they are your adversaries. Many times insurance companies will reward their adjusters based on minimizing settlements. When a demand for diminished value is made, insurance companies may deny diminished value has happened. Some insurance companies give adjusters scripts to help them lower the value of claims. Claimants need to support their claims with an expert evaluation that diminished value has occurred.
Understanding Diminished Value Claims
Your one-year-old vehicles value is $30,000. One day, you’re hit by another car, causing $5,000 in damage. Your auto insurance company pays for the repairs when you filed your insurance claim.
Your newly repaired car is still worth, $30,000 right? WRONG. Although your auto body shop does an excellent job, and your vehicle looks as good as it did before the accident, it’s value is now much less and is less desirable having been in a auto collision, should you decide to sell it now, or down the road.
Many times a frame or structurally damaged vehicle cannot be sold as a “certified used vehicle.” This will impact the vehicle’s value by as much as 40%!
This is where diminished value comes in! Your insurance company will be quick to write you a check for the repairs, but you’re entitled to receive another check for a diminished value claim.
If you list your vehicle for sale in the newspaper for $30,000, the first thing a buyer will ask is “Has the vehicle been in an auto accident?” Even if you didn’t disclose the accident, the buyer could still look up the accident history using .
Once they discovered the accident, the buyer would no longer be willing to pay you $30,000, but instead might offer $22,000. In this case, the diminished value would be $8,000.
$30,000 before accident
-$22,000 sale price
$8,000 in diminished value!
Even if you’ve already settled with the insurance company on the body damage, you can still file a separate diminished value claim if the repairs were done recently.
Your insurance claim for diminished value can be paid by your own insurance company or the other party’s company.
Understanding Diminished Value: First Party vs. Third Party
If the accident you were involved in was not your fault, diminished value is probably owed to you. As such, a third party claim is entitled to diminished value no matter what part of the United States the accident has occurred in. On many occasions, clients have come to Autoloss concerned as they live in Mississippi, Oregon, or North Carolina and as such are they still owed diminished value for their recent wreck regardless of what state the accident occurred in. Simply put, diminished value is not dependent on the state in which you reside. If you have been in a wreck, and you own or lease a newer model car, you are owed diminished value.
First Party vs. Third Party
First party claims are those where the “the insured” has a direct contract with an insurance company. For example, if the insured was driving and accidentally hit a dear then the insured would turn the diminished value claim into their insurance company. Depending upon the insured’s state of residence and insurance policy language, we estimate that diminished value is owed in approximately 50% of the claims. First party diminished value claims vary significantly depending on the insured’s policy and whether they are claiming diminished value under the collision, underinsured part of the policy, or the uninsured part of the motorist coverage.
Conversely, third party diminished value claims are considered more matter-of-fact, with an estimated 99% of claimants having the right to recover diminished value. Simply stated, tort law allows for the innocent party to be entitled to monetary compensation, a.k.a. to be ”made whole”. As the decrease in the claimant’s vehicle’s value is part of the damage caused by the insured, the claimant is entitled to monetary funds for diminished value.
Diminished value claims typically settle within thirty to sixty days if the claimant uses a reputable diminished value company, such as Autoloss. The appraisal is usually completed within a few days and faxed into the insurance company. Claimants typically have a diminished value check for thousands of dollars within 30-60 days.
As there are many types of first party claims, it is prudent to give Autoloss a call regardless of the type of claim so a licensed diminished value professional can go over the claim with you – typically for free.
Frame -Related Diminished Value
Modern trucks, vans, and SUVs have specific repair requirements that make them susceptible to frame-related Diminished Value.
Body-on-frame vehicles are not as simple as they used to be.
Design changes in late-model trucks and SUVs add to the repair complexity of these full-frame vehicles. Highly engineered crush zones are now a part of designs that require specific repair techniques. Lighter, stronger components let vehicle makers achieve better fuel economy, safety, and performance. Characteristics of these newer designs make it important that manufacturer’s repair procedures are followed to avoid compromising safety.
Areas of Concern for Diminished Value from Frame Damage
- High-strength steel and High-Strength Low-Alloy (HSLA) materials
These newer grades of steel have more stringent requirements for welding and heat treatment than older mild-steel frames.
- Factory spot welds vs. repair shop MIG welds
- Hydro-formed components
- Composite materials
Foam filled sections or aluminum composite construction
- Corrosion Protection
- Manufacturer’s repair requirements
Crush-zone integrity and proper air-bag timing may require sectioning and replacement of frame components, heat-straightening restrictions.
Further compounding the accident victim’s problems are insurance industry practices that attempt to hide diminished value caused by frame damage. We can help you determine if diminished value has occurred. Our expert appraisers know the latest full-frame repair methods and standards. We can find out if your vehicle has suffered frame damage even if the insurer or repair facility tries to conceal it.
Just a few of the things we check for:
- Clamp marks from frame straightening
- Factory spot-welds replaced by plug welds
- Welds from sectioning and component replacement
Do I need an attorney to settle a Diminished Value Claim?
If the claimant hires a reputable diminished value company such as Autoloss, within thirty to sixty days, the majority of claimants will receive a check for thousands of dollars for their diminished value, sans the use of an attorney.
Many attorneys are taking notice of diminished value claims and while most of those specialize in personal injury claims, they are adding diminished value claims to their case load as such claims settle so quickly and for thousands of dollars.
Don’t be Fooled
Call Autoloss today and find out if you are owned a diminished value check. No state has mandates that dictate the innocent party cannot recover diminished value. Don’t be fooled by insurance claims representatives or the repair shops – you deserve to be “made whole.”