What Are the Different Types of Car Accident Diminished Value Claims?

Many car owners have never even heard of diminished value claims—so why is this issue so important? Filing a diminished value claim can help vehicle owners recover hundreds—even thousands—of dollars owed after a car accident.

After going through a car accident, many policyholders think that they are owed just enough to cover the physical damage to their vehicles. However, there isn’t just physical damage to consider—there is the additional perceived damage that the vehicle’s history now reflects since it includes the car accident.

If a potential buyer, for example, were considering a vehicle for purchase, they may be less eager to see the sale through if they review the vehicles records and see that it has been in a car accident—even if the car has been repaired and is fully functional. The potential buyer may only consider purchasing the vehicle, therefore, at a reduced cost—the history of an accident has diminished the vehicle’s true value in the buyer’s eyes.

Not all types of diminished value claims are based on perception only; some actually do rely on lost value due to damage. So what is the difference between these different types of diminished value?

There are three types of diminished value, according to The Balance: 

• Immediate Diminished Value, or the difference in the vehicle’s resale or trade-in value from prior to the accident to after an accident but before repairs have been made
• Inherent Diminished Value, or the perceived loss in value of a vehicle even after repairs have restored it to its original condition. This is also sometimes referred to as “residual diminished value” or “stigma damage”
• Repair Related Diminished Value, a value loss resulting from the quality of repairs. For instance, if generic parts were used in the repairs, or if the paint used is not a perfect match to the original, then the overall value of the vehicle has been lowered

Car insurance companies are supposed to cover these diminished value costs on top of the actual cost of repair, a piece of important knowledge that most policyholders are unaware of. 

Of course, policies vary from state to state and company to company, but many consumers feel that the diminished value is the responsibility of an insurance company to pay, as are any fees in a total loss claim.

It’s important to note that in most states, an insurance company will not consider diminished value claims if the policyholder applying were the one at fault for the car accident in the first place.  

If you were not compensated for diminished value losses after your vehicle was in a car accident with an uninsured or underinsured motorist within the last five years (but wasn’t totaled), and its market value was reduced even after repairs, you may be able to join a nationwide class action lawsuit investigation.