Diminution of Value (Diminished Value): Is Your Car Worth Less After Accident Repairs Than If it Had Never Been Damaged?

The Allen Law Firm pursues diminished value claims on behalf of its personal injury clients as a "value added" service. Typically, the only expense is the appraisal fee unless the attorney is forced to litigate [1] the case in order to recover damages.

Virginia law allows that, even after proper repairs have been made, you can recover the "loss of value" of your repaired vehicle after an accident in addition to the cost of the repairs. [2] Insurance companies and auto repair shops called this loss of value the "diminution of value" or "diminished value" of the vehicle.

What is "diminished value?"

In layman's terms, "diminished value" means the difference in value between a vehicle that has never been damaged and the same vehicle after it has been damaged but has been properly repaired. Most of the time there is no significance difference but sometimes there is a tremendous difference. For instance, if you bought a mint condition 1967 Mustang Shelby convertible [3] and then someone ran into and did a lot of damage, including bending the frame and ripping out the motor mounts, then even if you had someone make excellent repairs, the car would still not be worth what an undamaged one would cost.

Given the choice of purchasing a car that had never been damaged or purchasing a car that had been in a significant accident, most people would prefer the one that had never been damaged. How much is that difference worth? In determining whether there is any diminished value and, if so, what the amount of the diminished value is, many factors are considered. Important factors include the extent and nature of the damage to the vehicle; the cost of the repairs; the age of the vehicle; and whether the car is a limited edition, a collector's item, or if other special circumstances exist. To make a diminished value claim, it is important to document the extent of the damage and the repairs with photographs. You will almost always need a written inspection by a qualified appraiser who can testify, if necessary, as to the condition of the vehicle after repairs are complete and the value of such a vehicle without damage or repairs.

When can diminished value claims be made?

Diminished value claims can only be made in certain situations. There are two types of motor vehicle property damage claims under motor vehicle insurance. The first is a "first party" claim where you make a claim against your own insurance company under your collision coverage. These claims are made when you or someone driving your vehicle is at fault. The second type of claim is a liability claim, when you are making a claim against someone else's insurance because they are at fault. Diminished value claims in Virginia only apply to liability claims, when the vehicle damage was caused by someone else's negligence, and not to first party "collision" claims, when the damage results from the owner's fault or someone the owner allows to drive the vehicle. [4]

Most insurance carriers doing business in Virginia are aware of "Diminution of Value" claims and regularly negotiate these claims when presented by the party whose auto has been extensively damaged by the negligence of the carrier's insured (usually their policyholder).

Keep in mind the insurance company normally will not voluntarily solicit a diminished value claim but, when confronted with the proper documentation, they will consider it. Proper documentation includes:

  1. Photographs of damages
  2. Photographs after repairs
  3. Written appraisal, after repairs, documenting the condition of the vehicle and "loss of value" (this is the difference in market value prior to accident and after repairs to vehicle), by a qualified appraiser. [5]

Although the appraiser will assign a specific dollar amount to the diminished value, the majority of insurance companies conducting business in the state of Virginia will want to negotiate. To be in the best bargaining position, you should get an appraiser who has the best credentials to appraise the diminished value for your specific vehicle, as that person will have the most credibility with the insurance company.


[1] - That is, if the attorney has to file a lawsuit in court.

[2] - The Virginia case that states this is the following: "Where the automobile is damaged but not completely destroyed the measure of damages is basically the difference between market value at the time of the injury and market value after the injury, which, where the injury is susceptible of repairs, is ordinarily measured by the cost of reasonable repairs necessary to restore the automobile to its original condition together with the diminution in value of the injured property after repairs are made. Averett v. Shircliff, 218 Va. 202, 206-207, 237 S.E.2d 92 (1977).

[3] - By the way, a fully restored but original car like this has been estimated to cost about $500,000.00. See http://askville.amazon.com/1967-Mustang-worth/AnswerViewer.do?requestId=5800589.

[4] - According to this article, there are three states where the law does recognize a diminished value claim for collision coverage, too: North Carolina, Georgia, and Kansas. See http://www.ican2000.com/dvfaqs.html. Note this website also claims to give a "diminished value" by e-mail, but such a valuation is not likely to carry much weight with an insurance company.

[5] - Normally the used vehicle appraiser for a car dealership can determine the diminished value for a vehicle, although there are also independent motor vehicle appraisers who are qualified to do such appraisals.

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