Diminished value

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Diminished value or diminution in value are the terms generally used to describe the loss in a property's market value after it was damaged in an accident and repaired. Diminished value is most often associated with automobiles but it is applicable to other property of value including real estate or collectibles such as jewelry and artwork. If a property was damaged and repair failed to restore it to its original market value then said property has suffered diminished value.

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 two ways (or a combination thereof):

(1) Repair-related diminished value;

(2) 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.

Inherent Diminished Value assumes optimal repair quality has been achieved and is defined as the amount by which the resale value of a repaired vehicle has been reduced simply because the subject vehicle now has a significant damage history. This is the most widely recognized and accepted form of Diminished Value. It is also the basis upon which any supplemental form of Diminished Value would be added. A common "Supplemental" form of Diminished Value is "Repair Related Diminished Value".

Usually, a frame or structurally damaged vehicle cannot be re-sold as a "certified pre-owned vehicle."

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 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 damage 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.

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.) and additional value considerations including, but not limited to values associated with pre-owned certification programs, etc.

Auto insurance companies may not readily recognize or offer to pay for diminished value. All states and territories allow third-party diminished value claims filed with the at-fault insurance. The legal basis for third-party claims is rooted in the tort law. Additionally, Georgia allows first-party diminished claims made against a driver's own insurance policy.

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

Diminished value can only be collected by the legal owner of the vehicle. That's why if a consumer leases a vehicle, they cannot collect Diminished Value because the legal owner of a leased vehicle is the leasing company.[1]

Diminished Value Appraisal[edit]

A diminished value appraisal 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. The report measures a damaged vehicle's inherent loss in value. The diminished 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. In most cases even if the repair was done expertly, the value of the automobile will still be considerably less after a loss. When consumers find that a vehicle has been in an accident, most consumers will never pay the same price for a repaired vehicle as compared to one with no loss history.

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. 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.


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

United States[edit]

Some states' statutes acknowledge diminished value and provide the ability for consumers to collect first party claims of DV from their own insurance companies under their own policies. Most states allow the consumer to collect third party claims from the at-fault driver's insurance company. Some states recognize liability for third party claims but not first party claims.[2]


In Georgia, vehicle owners can collect DV against their own policy.


Diminished value is part of the Florida Standard Civil Jury Instructions.[3] Diminished value case law in Florida is based primarily on two cases.

  • Siegle vs. Progressive Consumer's Insurance Company, 819 So.2d 732 (Florida 2002).

The ability to receive diminished value financial compensation from an at-fault driver for their negligence was decided by the Florida Supreme Court in the Siegle vs. Progressive Consumer's Insurance Company case. After Siegle insurance companies are able to exclude responsibility for the payment of diminished value to the vehicle that they insure through the language in the policy.

  • McHale vs. Farm Bureau Mutual Insurance Co. 409 So.2d 238 (1982)

The Florida Third District Court of Appeal, upheld that the correct measure of damages is the cost of repair plus any reduction in the value of the vehicle. The Court also directed that proving the reduction in value is the burden of the Plaintiff bringing the claim.


Diminished value is provided in Louisiana Revised Statute 9:2800.17. The vehicle owner must prove by a preponderance of evidence that the fair market value would be less than its value before the vehicle was damaged.


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.


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.[4]

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.

See also[edit]


  1. ^ "Frequently Asked Questions about Diminished Value - Diminished Value Help & Advice". www.diminishedvalue.info. Retrieved 2020-11-17.
  2. ^ http://www.mwl-law.com/wp-content/uploads/2013/03/diminution-of-value-in-all-50-states.pdf
  3. ^ "Florida Standard Jury Instructions - Civil". State of Florida.
  4. ^ Rule 11-2 BC Supreme Court