After any accident, there is often damage. And the damage may include loss - not only physical loss, but also the inherent loss of value, commonly called diminished value. But what exactly is diminished value?
diminished value can best be defined as an economic loss of the value of the damaged property. In the case of an automobile collision may negatively affect the market value of a vehicle. This means that the value of the vehicle before the accident decreased due to the fact that he was involved in an accident.
The evaluation of the amount of reduced value can be difficult. Unlike real physical damage, where the cost of repairing the damage is relatively concrete and finite, the amount of the reduced value can be difficult to determine. Unless one actually sells or trades vehicles and indicates the trade or sale value is "X" amount lower due to the fact that the vehicle was involved in an accident, the amount in question may be open to debate.
Decreased value takes into consideration not only the fact that the accident occurred, but also the degree of real structural damage that was sustained, if any. Obviously, a replacement rear bumper is not the same as if the rear body panel, floor and the two rear spars were also compromised. The higher the degree of structural damage and fewer miles on the vehicle at the time of loss, plus the loss of actual or perceived market value supported. However, the impact of the inherent loss in the value generally decreases as an owner keeps the vehicle after an accident and increases mileage.
So what exactly does this mean for you, the vehicle owner? The damage from the brand, model year, and mileage of the vehicle can have many variables in measuring the diminished value supported, if any. Anyway, the impairment is not something to be overlooked. This is especially true if you plan to exchange or sell your vehicle soon. Theoretically, if a vehicle is repaired to its pre-loss condition, there is really little inherent diminished value. However, the fact remains that most consumers and dealers will not pay the same for a vehicle that was involved in a recent accident as they would for the same vehicle that has no history of damage.
If you are involved in an accident for which you are not at fault and the insurance company of the other driver paid for your injury claim, there is a possibility that you might have a valid claim for diminished value. Regarding the claims of the first part that is between you and your insurer, the terms of the general policy does not include cover for impairment. The only notable exception is the state of Georgia, and that depends on the particular policy. As always, check with your independent agent for more details on your personal auto policy. I would like to hear your thoughts on diminished value, please leave a comment below!
The policy covers described above are in the most general terms and are subject to the exclusions and real political conditions. For precise details of coverage and exclusions of the policy, refer to the policy itself or contact an independent agent.
Individual states can handle situations diminished value differently, so please consult your independent agent for your state laws regarding the diminished value.
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