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Diminished auto value is the value of a vehicle after an accident. That is the general definition, but there are actually three types of diminished auto value. Each type of diminished value has a different impact on your insurance claims and the future resale of your vehicle. It is important to know what these three types of diminished value are and why you should understand the impact they have on your car.
Immediate Diminished Value
Immediate diminished value is the value of your vehicle right after an accident. Your car may have been worth five thousand dollars before a crash, but now it is only worth two thousand. That is inherent diminished value. It means that, even if you repair it and restore it completely, the accident is tied to the VIN of the vehicle, and a buyer can look the car up and find out that it was in an accident. You will not be able to sell the car for its pre-accident value when this information is on the record for the history of the vehicle. You will have to sell it for less, even though you invested a lot of money to restore it.
Inherent Diminished Value
If you are really lucky to have an incredible mechanic on the job, you might be able to restore some of the vehicle's lost value after the accident. This can only be accomplished by high-quality car repairs. The vehicle has to be restored to its near-mint condition with original factory parts if you have any hope of regaining some of the value of the vehicle. The reason this works is that you have to shell out a lot of money to a manufacturer-certified auto mechanic to get everything back in place perfectly. Insurance claims are not likely to pay for that. Instead, the insurance company will pay for repairs for the lowest or estimate possible or insist on totaling out your vehicle completely.
Repair-Related Diminished Value
When insurance companies only pay for the bare minimum in repairs and restoration, you either have to pay a lot more out of pocket, or you take the vehicle to a shop that does things cheaply. If you take your vehicle to a shop that does things cheaply, your vehicle may suffer from repair-related diminished value. It means that the mechanic used low-quality parts that are not original factory parts, and therefore the restoration is not true to the make and model of the vehicle. Again, you would lose money trying to resell this vehicle.
For more information about diminished auto value claims, contact an industry professional.
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