Diminished value (DV) is the cost of your car’s loss of reputation following a car accident (we think it’s hysterical that a car has its own reputation, but that’s a joke for a different day). Even if your car is repaired by a quality and qualified professional to restore it back to its pre-accident condition, a potential buyer won’t be willing to pay the same price. That difference in the pre-accident market value of your car to the post-repair value of the car is how diminished value is calculated. Now that you know what a diminished value claim is, let's learn about the different types.
Types of Diminished Value
There are three types of diminished value.
1. Inherent diminished value
This is the most common form of DV after an auto accident. This type of vehicle’s diminished value is recognized as existing solely because the history of property damage will reduce the car’s value on the market. This assumes repairs have been done correctly.
2. Immediate diminished value
This represents the difference in value of the car immediately following the car accident before any repairs are made. This wouldn’t be applicable in most cases because the car insurance company will cover the cost of repairs.
3. Repair-related diminished value
This is the loss of resale value to the car due to faulty repairs. This loss in market value is beyond the reputational damage from the car accident and repairs cannot be remediated.
In most cases following a crash an inherent diminished value claim will be made. Each state has slightly different criteria for eligibility and calculation of DV but there are a few commonalities.
- There is a cutoff for age (often 7-10+ years) and mileage (typically 100k+)
- Age and mileage detract from the DV value
- Severity of property damage increases the DV value
If you've been involved in an accident and are seeking legal support and representation, head over to Mighty's Accident Attorney Directory to find a trusted attorney in your area today.
Written ByJosh Schwadron
Chief Executive Officer
About the author
Joshua is a lawyer and tech entrepreneur who speaks and writes frequently on the civil justice system. Previously, Joshua founded Betterfly, a VC-backed marketplace that reimagined how consumers find local services by connecting them to individuals rather than companies. Betterfly was acquired by Takelessons in 2014. Joshua holds a JD from Emory University, and a BA in Economics and MA in Accounting from the University of Michigan.
About the reviewer