What does “Diminished Value” Mean?

The collision happened, so your car will inevitably have damage needing repair. Your insurance company (or the company of the at-fault driver) will typically offer you compensation for the cost of repairs. You receive the check and the repairs, and your vehicle is good as new - right? Wrong.

 

Although the repairs will help your vehicle look and drive better, they will still leave “evidence of repairs.” Unfortunately, evidence of repairs will diminish the value of your car when you want to sell it or trade it in. Potential buyers will view a wreck as a blemish on the vehicle’s history due to your vehicle’s Carfax record. They may argue the accident and subsequent repairs altered the original vehicle or worsened it in some way.

 

Diminished value describes the difference between what your vehicle was worth before the collision and what it is worth after the repairs. An insurance company may argue there is no diminished value - that you can sell your repaired vehicle for the same price you would have had no accident occurred. This isn’t always true. Even if your repairs look perfect, a history of damage can deter buyers (inherent diminished value). If you have to replace your existing vehicle parts with different versions because the insurance company won’t authorize certain repairs (claim-related diminished value), this can also result in a lower-value vehicle.