Is Your Car Worth Less After an Accident? Vehicle Diminished Value Claims
There were tens of thousands of car accidents in the Portland metro area last year. Even though a fender bender can appear minor at first, it can leave your car with a lifetime problems. If your vehicle has been damaged in an accident, it has likely lost resale value, even after it’s been completely repaired. Industry experts refer to this lost value as diminished value. You may have a claim for the lost value of your car and not even know it. The good news is that the at-fault parties insurance may be responsible for the diminished value of your vehicle. There are three basic types of diminished value that you may be entitled to compensation for, and those are inherent diminished value, insurance related diminish value, and repair related diminish value.
Inherent diminished value is the automatic and unavoidable loss of market value simply due to the fact that vehicle has been involved in an accident. It makes sense. Have you ever shopped for a used car? If so, you’ve probably asked the salesmen if the car had ever been in an accident. You might even go as far to purchase a CARFAX ™ or AutoCheck™ report to help you decide whether to purchase a particular vehicle. And if it has been in an accident what was your reaction? What if you were looking for a 2010 Mercedes E350 and you were lucky enough to find two identical used Mercedes E350’s for sale, the same car, same mileage, even the same color, but one has been involved in an accident and was repaired by a highly reputable body shop. What if you knew the total cost of repairs were $13,000. Which car would you pick? If you picked the Mercedes that had been repaired would you expect to pay the same price for it? Probably not. You might expect that vehicle to be priced up to several thousand dollars less than the car that had never been in an accident. When selling or trading in your vehicle some states require full disclosure of all prior accidents the vehicle has been in, even if the damage was only cosmetic. So it goes without saying that most consumers prefer a vehicle with a clean title over a vehicle that has been in an accident and has been repaired. This means individuals receive less money for their vehicle which has been repaired than a vehicle that had not been involved in an accident in the first place. The exact of diminished value you are entitled to is the difference between the market value of a vehicle that has never been in an accident and the market value of a vehicle that had been repaired. Inherent Diminished Value is the most common type of Diminished Value. Insurance related diminished value is depreciation incurred due to oversights and omissions by the insurance company on their appraisal. Insurance adjusters generally appraise damage that they can see, not potential hidden damage which can add up to thousands of dollars. Another major factor that contributes to insurance related diminished value is the mandated use of imitation replacement parts. This is a particularly dangerous insurance practice if your car is still covered under the original manufactures warranty, because imitation replacement parts may actually void your warranty. Needless to say, choosing the right body shop is imperative. The insurance company may provide you a list of preferred body shops, but this may not be such a good deal. Often the insurance companies require their preferred body shop to offer repairs at a cut rate in exchange for a large volume of referrals which in return become their core business. Consider this. If your adjuster tells their preferred body shop to order used or imitation parts do you think the body shop will bite the hand that’s feeding them? Do these insurance preferred shops have any incentive to look out for your best interest? Probably not. Remember the preferred body shop’s business is dependent upon insurance referrals, not good old fashion word of mouth referrals. To avoid insurance related diminished value your first best bet is to avoid the preferred insurance shops altogether. There simply is a lesser likelihood of the body shop being bullied into overlooking hidden damage and shoddy repairs at your expense. Next ask your friends and family for referrals, and have a post-repair inspection completed by a diminished value expert to insure all necessary repairs were completed and done in a workman like manner.
The final type of diminished value is repair related diminish value, and is the depreciation incurred due to improper or incomplete repairs, poor quality repairs, or un-repaired items that were compensated. Even in the best of body shops damage is improperly repaired, or worse yet overlooked completely. Additionally, your vehicle simply will not be returned in the perfect value it was when it came off the assembly line. Most consumers incorrectly assume their vehicle will be restored to its pre-crash condition. Often insurance mandated imitation parts don’t exactly match the car’s contours leaving repairs highly noticeable. When it comes to fenders imitation parts often have fit problems. Some require widening the holes or using shims. Replacement bumpers may need to be re-drilled or widened leaving large gaps or uneven surfaces. Welds will never be as strong as they were off the assembly line, and even the best shops can miss hidden damage such as minor frame damage, alignment issues, and engine or transmission parts damaged as a result of the accident.
It’s a fact of life that a vehicle that has been in an accident is going to be worth less money. Almost every damaged motor vehicle will have some inherent diminished value which can evolve into an actual loss to the consumer. Insurance and repair related diminished value can and do happen every day and cost consumers millions of dollars each year. If you’ve been in an accident in Washington, or Oregon and were less than 50% at-fault you may be entitled to recover diminished value from the at-fault parties insurance. Generally, the more your car is worth the greater the diminished value will be. You may be owed thousands of dollars and not even know it.