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Most car accident victims don’t know what diminished value is and the benefits that come with it. Most insurance companies refrain from educating their customers about diminished value claims because they want to avoid paying thousands of dollars in additional claims, making diminished value a huge secret in the auto insurance industry. Many adjusters are given scripts to help them lower the value owed to the customer. While you may not acquire a settlement which will recover the original value of your vehicle, at least you have the opportunity to be compensated for what is a significant investment.

What is Diminished Value (DV) anyways?

DV is when a vehicle has been damaged in an accident and repaired, and the resale value may be less than a comparable vehicle that has not been damaged. The damage results in a reduction or “diminution” in the market value of the vehicle, even after repairs have been done. There are three types of diminished value:

Immediate Diminished Value:

This is the loss in value that results immediately after an accident before any repairs have been done.

Inherent Diminished Value:

This refers to the loss in value of a vehicle that remains after it is completely and professionally repaired. It is the value that results from the simple fact that the vehicle was damaged in an accident.

Repair-Related Diminished Value:

This is the additional loss in value to a vehicle which results from incomplete or poor repair.

Some body shops and towing companies may try to scam you by picking up your car and taking it to a body shop which will trick you in order to charge you with storage fees. For example, you may be taken to a body shop which will tell you they will work with you insurance company in order to estimate the damages. Once you leave the lot, they may ignore your calls and charge you storage fees without performing any repairs on your car. Avoid lurkers. Never use a towing firm that just happens to show up at the scene. It might be a “bandit” monitoring police scanners for accidents.

Unfortunately, it is all too common for disputes to arise following a trip to the body shop. Even if a body shop does perform repairs, they may not always be correctly done. For example, some body shops are not licensed and can perform poor repairs, such as improper alignment of doors or machinery (which refrains the vehicle’s ability to drive straight), or improper color paint. Sometimes, body shops can do more damage by using substandard repairs with inexpensive knockoff parts that can be unsafe and dangerous. Repair costs also are inflated.

It is important to do some research before leaving you car in the palms of a randomly selected shop. Asking friends or relatives and checking reviews before choosing your body shop is a good place to start. If your consumer’s state requires that collision repair shops be licensed, it is essential to confirm that the chosen shop is licensed.

It is important to get a detailed appraisal of the cost of repair from the shop and a separate copy which describes exactly what the customer and the shop have agreed upon. This should include the cost of repair is guaranteed not to go over the amount stated or whether the shop may be able to change more if they come across hidden damage. You should also ask for a written copy of the shop’s storage policy, which specifies when the shop will begin charging for for the vehicle left in the shop. You should also get a written copy of the shop’s repair warranty, which will specify what is warrantied and for how long. When the work is complete, you need to request a final written detailed bill, which specifies such things as what work was done, what labor was performed, and what parts were replaced.

Here are some tips to avoid complicated situations:

Use your body shop. Use the body shop you want. Never let the tow truck driver choose the shop. AAA or your auto insurer will help you out. Plan ahead: Join an emergency road service such as AAA. Know your auto insurer’s roadside assistance program, with the number on your insurance card. They’ll set you up with trustworthy towing firms and body shops. Avoid lurkers. Never use a towing firm that just happens to show up at the scene. It could be a scammer monitoring police scanners for accidents. Approval forms. Sign only the approval form authorizing a tow to a designated body shop. Avoid signing other forms. Make sure the name and address on the form are the same as the on the tow truck. Once you sign at the bottom, the towing firm might fill in the blanks with inflated fees and location of a shady body shop. So, sign under the quoted amount on the form. Price list. Have the towing company gives you a price list that includes towing and storage fees, and other chages (if any). Ask for printed documentation of the location to which the vehicle is being towed. Damage report. Make sure the tow truck driver signs a damage report at the accident scene and ask for a copy. Use credit cards. Do not deal with tow truck companies that ask for immediate cash payments. Towing companies usually must allow credit card payments. Keep insurance info. Don’t provide the towing driver with your insurance information or other personal information. A dishonest towing firm or body shop may use this information to contact you and impersonate the insurance company. Photos. Take photos of the accident scene as well as photos of the tow truck. Complain. File complaints if you’re scammed. Contact your insurance company, local Better Business Bureau, and police.

What are the Benefits of a Diminished Value Claim?

If you were in an accident for which you were not at fault, you are usually entitled to a check from your insurance company for DV. Many insurance companies 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.

Let’s use an example.

If you own a 1 year old vehicle worth $20,000 and are hit by another vehicle, causing $3,000 in damages, your vehicle will never be worth as much as it was initially worth, no matter how good the repairs. A frame a frame or structurally damaged vehicle cannot be sold as “certified used vehicle.” This impacts the vehicle’s value by up to 40%. You insurance company may write you a check for the repairs, but you are entitled to DV. The accident will be recorded and the buyer may look up the history using anytime. Instead of paying $20,000 for the vehicle, a buyer may now offer you $15,000. The diminished value, in this case, is $5,000.

Diminished Value Claim?

If you’ve been in a car accident, please give us a call at 1-800-INJURED and let us put you in touch with experienced car accident lawyers and local medical centers that can get you the care and compensation that you deserve.


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