Diminished Value is the reduction in resale value of a repaired vehicle due to accident history. Even after high quality repairs have been performed, a significant portion of a damaged vehicle's original value is never restored.
Would you pay as much for a vehicle that has an accident history compared to one that doesn't?
With widespread consumer advertising of vehicle history reports (CarFax), accident history has a profound effect on the fair market value of an automobile. Car dealers today avoid purchasing vehicles with adverse CarFax reports. The wrecked car could be repaired better than new and a dealer is still unlikely to buy the vehicle. Why not? Because consumers today are armed with information and will not purchase a vehicle with accident history without a massive discount.
Automobile dealers are frequently portrayed in ads that sensationalize "worst case" scenarios where vehicles are misrepresented (by the dealer) to consumers, with vehicle history providers being the hero by saving the customer from a bad purchase. In addition to consumers, dealers spend a significant amount of money on vehicle history products at various touch points in the retail process, as do vehicle wholesalers, online classified sites, financial institutions and even insurance companies.
The financial impact of accident history reporting is no secret. Major Collision on a CarFax report is typically a $2,500 deduction on the fair market value on a vehicle. There is unquestionable proof that the vehicle owner has suffered significant financial loss even though they have repaired the vehicle!
The subject of diminution of value damages caused serious concern to the insurance industry because insurers believe their policies are clear and they are only required to pay the cost of repair. There are websites dedicated to helping consumers understand what each states provision for diminished value and how they can potentially recover additional compensation from their insurance carrier. For additional information please consult with your state Department of Insurance or contact us at 855 DMG MAX1.
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