Diminished value is the actual loss in vehicle market value due to accident damage and the repair process.
Diminished value occurs in three areas:
1. Inherent diminished value:
The automatic loss in the vehicle market value from an accident and repair. It is based on public awareness that even if a vehicle is repaired to the best of human ability, it will still exhibit remaining deficiencies and inconsistencies from the pre-loss condition of the vehicle.
These deficiencies include, but are not limited to:
2. Repair related diminished value:
This loss is based on remaining flaws and defects caused by improper repairs for which the shop had been asked, and paid, to complete. Poor repairs would cause the vehicle to be valued less than a properly repaired vehicle.
A few examples of repair related flaws and defects are as follows:
Keep in mind that even if there is "Repair Related Diminished value", the insurer is still the only one contractually obligated to restore the vehicle to its pre-loss condition relevant to function, appearance, safety, and value, thus any "Repair Related" diminished value would still be the insurer's responsibility. This area of coverage may fall under the "comprehensive", or "Under Insured" sections of the insurance policy. If the insurer feels that they have sustained losses due to poor repairs, they have the duty to pay the remaining damages (perhaps under the comprehensive section of the policy), and the right to subrogate those losses directly against the at fault shop.
By following these correct and legal steps, the insurance industry would be sending a clear message to repairers that poor quality repairs and fraud are unacceptable.
3. Insurance related diminished value:
Under each of the above scenarios, the insurer is bound by law to the assessment and actions of the party the insurer hired to represent themselves. When the appraiser for the insurer (a, b, or c) prepares a damage assessments, or (d) where the insurer relies upon a third party, which overlooks, fails to specify, or refuses to address all repair procedures, parts, and materials required to restore the vehicle to its pre-loss condition, the insurer becomes responsible for "Insurance Related Diminished Value". Since the insurer (and consumer) relies upon the skill and expertise of the insurer's hired appraiser, it would be incumbent upon the insurer to select competent and skilled persons as appraisers so that by complete repair to pre-loss function, appearance, safety, and value, the insurer would have met their contractual obligations. Any failure to authorize all required procedures, parts, and materials to restore a vehicle to its pre-loss condition must be caused by one of the following:
When there is remaining flaws, defects, or damage on the vehicle, and repair procedures were not specifically listed on the itemized insurance authorized repairs, the result would be "Insurance Related Diminished Value". Additionally, when the insurer specifies imitation parts, which are NOT EQUAL TO, OR BETTER THAN the Original Equipment Manufacturer parts, the insurer would also be responsible for the Diminished Value caused by the inferior parts they specified.
Adapted from WreckCheck
Meet The Amazing Team At Medines Collision Center
75% of accident vehicles are improperly repaired by collision centers. Many repair facilities are guilty of using aftermarket parts to complete the repairs. If you've been in an accident and want to ensure the integrity of the car repair, schedule a post-accident repair appointment today.