Diminished value

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Diminished Value: Diminished Value, Diminution in Value, or commonly referred to as “DV” are the terms generally used to describe the economic loss in a property's value as a result of having been damaged. Diminished Value (DV) is often associated with vehicles that have been damaged however is applicable to other property of value including collectibles such as jewelry, artwork etc. For the purposes herein, reference will involve the loss in value of a damaged automobile whereas the term is often applied.

Unlike "depreciation", which is an anticipated and predictable loss in value over time, ‘Inherent Diminished Value’ is a loss in value due to a specific, sudden and unexpected negative occurrence. Diminished value of an automobile following an accident may occur in one of three ways (or a combination thereof): (1) repair-related diminished value; (2) claim-related diminished value; and (3) inherent diminished value. Repair-related diminished value is the loss of value due to the inability to perfectly repair the vehicle so it is worth less after repairs than it was before the wreck. Claim-related diminished value refers to a loss of value caused by the insurer's direct involvement in the claim adjustment in which the insurer exerts control over the repairs and repairs are incomplete, insufficiently performed, or otherwise restore the vehicle to less than the pre-wreck condition. Inherent diminished value refers to the loss of market value of the vehicle due to having a wreck in the vehicle's history. Buyers are unlikely to pay the same price for a vehicle with an accident in its history than the same or a similar vehicle with no accident history. The difference exists even if the repairs are perfectly performed.

The true measure of a damaged vehicle's inherent loss in value can be measured as the difference in the value of the vehicle before the loss to that after the loss, prior to or after repair.

While some may claim Diminished Value (DV) is subjective and based upon perception or speculation, the old adage "perception becomes reality' applies and as such Diminution in Value is real simply because, for the most part, no reasonable and prudent person is willing to pay the same price for a vehicle with a history of damages as they would for one never having been damaged. Retailers often offer discounts for scratches and dents on appliances, electronics and dented canned goods; it is therefore reasonable that the value of a damaged motor vehicle will suffer a lessening in value. [1]

Additional factors may be taken into consideration in evaluating the loss in value of a damaged and repaired vehicle and may include, but not be limited to: the vehicle itself (i.e. rare collectible, originality, market desirability etc.), the vehicle’s pre-loss condition, severity of the sustained damages (i.e. frame damage, flood, fire etc.), the subject vehicle’s history (i.e. one owner, prior damage/repair, death of occupants etc.), quality and thoroughness of the performed repairs, (i.e. quality of parts, materials, workmanship etc.) additional value considerations including, but not limited to values associated with pre-owned certification programs.etc. [2]

Auto insurance companies may not readily recognize or offer to pay for diminished value. Each state may have differing opinions of DV. Example; The state of Georgia allows the insured party (the first-Party Policy holder) to make a claim for their remaining economic loss for DV from their own insurance company while the neighboring state of Florida does not. Most all states however allow the victim of another's negligence (third-party) to make a DV claim from the at-fault party. [3]

The length of time to collect Diminished Value will depend upon each state's statute of limitations for first party (contractual) claims and third-party (restatement of tort) claims. [4]

Diminished Value Appraisal[edit]

A diminished value appraisal[disambiguation needed] evaluates the difference in value of a motor vehicle after a collision repair. Reports are usually compiled by an Auto Appraisal Expert experienced in the field of DV and who may provide expert testimony for Appraisals, Arbitration, Mediation or Litigation in a court of law. This Assessment report is used when filing or disputing a diminished value claim against another party and/or an insurance company.

Some reports include an assessment of the damage done to a motor vehicle, the quality of the performed repair, the market value of the vehicle before and after the accident.[citation needed] There are no set rules for measuring diminished value, and since every vehicle loses value differently a one size fits all formula would be fundamentally inaccurate. [5]


Recognition of concept of diminished value varies from country to country[citation needed]

United States[edit]

In some states insurance companies acknowledge diminished value and provide this coverage direct to their consumers.[citation needed] Not all states recognize diminished value claims on automobiles. Further, states differ on the extent that they recognize claims and require insurers to cover first party claims in which the insured files for diminished value against his or her own insurer. Some states recognize liability for third party claims but not first party claims.[6]


On July 15, 2014, a policyholder in Washington state filed a proposed class action lawsuit in the Superior Court of Pierce County seeking diminished value insurance benefits under their automobile insurance policies. The insurance company filed a notice to remove the lawsuit to federal district court on August 20, 2014. The case is titled Johnston v. United Services Automobile Ass'n. [7]


The ability to recover damages for accelerated depreciation varies from Province to Province.[citation needed]

In British Columbia,law recognizes this loss as a recoverable damage and quantify the claim based on the diminished value at the time the collision occurs.[8]

The Rules addressing the admissibility of depreciation reports in court vary by jurisdiction.[citation needed] For example, in British Columbia, Canada, the BC Supreme Court requires such reports to comply with Rule 11.

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