Diminished Value of Your Car

Posted Friday, January 11, 2013 by Ed Harper

When bringing a claim for Diminished Value what is key is that the vehicle cannot be restored to its pre-collision status, not that it has lost intangible value to future buyers. The legal terms here are “Diminished Value” (which allows for recovery) versus “stigma damages” (which are intangible and not recoverable). The court cares whether “repairs leave the market value of the vehicle substantially less than the value immediately before the collision.”

The idea of diminished value deals with the change in market value of the car.
Specifically “fair cash market value” (WPI 30.12).

The insurer is responsible to determine Fair Market Value (FMV) and whether the vehicle is a total loss. For a total loss (if repairs are greater than the pre-collision market value of the vehicle) only the market value can be recovered. First party policies (I’m not sure what those are) have an appraisal clause which the injured party should invoke in the case of a bad faith or consumer protection claim against the insurer. Third party Diminished Value (DV) claims are accepted by most insurers.

Ensure no prior collision (can run a CARFAX report to establish this).
Assuming no prior collision, get a general idea of FMV at the current time by either using nada.com or finding the depreciation rate of the car online. Do this soon after the collision for the most accuracy. A quote from a dealer does not credibly establish FMV in court. A court will ultimately require an expert appraisal. Expect an arbitrator to accept a value 10% to 20% below the FMV.

Pre-loss FMV is objective. Post-loss FMV is not and will depend on the strength of one’s expert. Experts cost around $1000, so the DV will have to be fairly larger than that obviously.

Whether you get money will significantly depend on:
1)no prior collisions
2)less than 6 years old
3)less than 90,000 miles
4)have repairs over $1500 from the collision
5)have some structural damage from the collision

How much money you get will significantly depend on:
1)the vehicle’s age
2)the collision’s severity
3)the vehicle’s mileage
4)structural damage, especially frame

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