Diminished Value Vehicle
What is Diminished Value?
If you’re like everyone else we’ve spoken with, you answered Car A. Even though Car B has been repaired, most people would prefer to a vehicle that has no history of damage and therefore would pay less for Car B than for Car A. This concept is called inherent diminished value.
The Best Kept Secret in the Insurance Industry – Diminution in Value
Each year, there are over 27 million car accidents in the United States of all types, 15.1 million which are collisions involving other vehicles. If you are the average driver, you will sustain three to four accidents over the course of your life and although it’s highly unlikely that you will be severely injured in a collision, it is almost a statistical certainty that you will incur substantial property damage to your vehicle. According to U.S. Census Bureau data, the property damage associated with these accidents reaches into the hundreds of billions of dollars.
A Hidden Loss
But did you know that you may have suffered another loss, a hidden loss that you may not have even been aware of and that may have even exceeded the cost of the repair of your vehicle. After your accident, your vehicle acquires a damage history that will follow it around forever, and the stigma that attaches to your car makes it worth less than had it never been in accident.
This concept is called “Inherent Diminished Value” or “Inherent Diminution in Value”. Many people may have never heard of diminished value even though most people would agree they would not pay as much for a vehicle that has an accident history as one that does not. The reason is because insurance companies DON’T WANT YOU TO KNOW ABOUT IT.
Money You Deserve
Diminished value has been around for over 100 years and is a loss that affects all types of property, including industrial buildings, condominiums, tractor trailers, buses, airplanes, heavy equipment and farm machinery, and of course to automobiles. Still, mention the phrase “diminished value” to an insurance company, and most insurance companies will act as if you are asking them whether the moon is made of green cheese.
Why Would Insurance Companies Deny a Compensable Claim?
Because there is no risk for denying the claim! Most consumers have never heard of diminished value and insurance companies prefer to keep it that way. Even those consumers that are aware of diminished value are rarely able to found a lawyer to help them with the claim because the claims tend to be fairly small (normally no more than a few thousand dollars). Conservative estimates have pegged annual losses associated with diminished value of vehicles to be in excess of 50 billion dollars annually! That represents a lot of money to saved by the insurance company by denying those claims.