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The best kept secret the insurance company had...

Until now. Its called Diminished Value, DV, diminution of value, loss in resale value, accelerated depreciation....it's called many things. It is the direct and actual loss or reduction in an automobile's market value due to its involvement in an accident. This loss can and does occur even when a vehicle has been repaired properly.

Look at it this way. You're looking to sell your vehicle. You have found a buyer who is looking at your
vehicle and one other. The other vehicle is the same year, make, and model. It has all the same options and is the same price. The buyer looks at car number 1. The vehicle looks good and drives great. He asks if it has ever been wrecked. No, he's informed never a dent or scratch.
Your vehicle is just as clean and drives just as well. The buyer asks you if you car has ever been wrecked. Silence for a few moments, and then you say "Well...ah...ya...it was in the body shop for a little fender bender. Nothing serious" you add.

Which vehicle are you going to buy when in that situation? I always get the same answer. The obvious
answer. The only logical answer. The one that has never been wrecked. Soon you realize that your going to have to lower your price to make your vehicle more attractive compared
to the undamaged one. You have suffered a DV loss as a direct result of the accident. 
More technically, Diminished Value is due to:

  1. Damage history. Vehicle history reports like Car Fax make it know that the vehicle was wrecked and repaired. Additionally, you have a duty to disclose this damage to any future buyer
  2. Voided factory warranty on the repaired area
  3. Missing vehicle ID tags that cannot be replaced
  4. Increased likelihood of mechanical failure
  5. Impossible to duplicate immersion rustproofing techniques
  6. The potential for undiscovered damage
  7. Increased likelihood of premature failure of bearing, seals and electrical components
  8.  Paint that may not age or wear in a similar manner to the factory paint
  9. Vehicle no longer qualifies for the manufactures "Certified Pre-Owned" program
  10.  No evidence that the vehicle's frame has been restored to all factory specifications, tolerances, strength and rigidity to ensure deployment of the SRS (Supplemental Restraint Systems) at the factory specified level of impact in the event of a subsequent accident.

Do insurance companies pay for diminished value?
If another driver was responsible for the accident, that person would owe you for all of your losses that flow from the accident, and that would include Diminished Value. The legal measurement of property damage is the difference in the value before and after the accident. Repairs will restore some value, but even high quality repairs cannot restore ALL the value for reasons stated above. A claim for diminished value can still be submitted to the at fault drivers insurer even if your own company paid for the repairs. If, on the other hand, you are responsible for the accident, payment for DV and other losses is dependent on your insurance policy, and the laws and regulations of the state. If your policy excludes payment for DV, you may be able to deduct the diminished value on your income tax as an un-reimbursed casualty loss. Check with your tax adviser to see if you qualify.

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