What is Diminished Value?

The first thing one must understand about diminished value is that it shouldn't be misinterpreted as depreciated value. Granted, your vehicle has that brand-new cushion scent and a spanking sheen of metal glory, depreciation happens the moment you roll it out of your dealer's showroom. It automatically ceases to be new and begins to lose its worth. It doesn't matter that throughout its eventual years of plying routes and racing down thoroughfares, it never incurred a single scratch or dent on it. It also doesn't matter if you have properly maintained it. A vehicle in time is no longer in its prime.


So what is diminished value? A vehicle is said to have diminished value after an accident or collision (or natural catastrophe in some cases) caused it to sustain considerable damage that would require extensive repairs to rehabilitate it. Here's a sobering truth that a vehicle owner must come to grips with about his vehicle's diminished value: nothing he does from this point on can reverse that. Repairs, regardless of extent, will never restore the value of his vehicle prior to the accident. From any potential second-hand buyer's perspective, it's generally and rightly considered to be damaged goods.

Damage extent or degree is the sole determinant in registering an accurate appraisal of your vehicle's diminished value. One type of diminished value can be attributed to the quality of repair also known as Repair-Related. What this categorically states is that your vehicle's loss of value is due to erratic or slapdash repairs performed on it. Think of it as corrective surgery performed on you that failed to correct whatever was ailing you prior to the procedure. You're never the same person again. It's the same way with a vehicle that wasn't properly repaired. That's why it becomes considerably less compared to its worth prior to repairs.

Answering "what is diminished value" can get a little tricky with different classifications. For example, another category is known as Immediate Diminished Value. As the term implies, your vehicle's current worth is the difference between what it was before an accident and what it became shortly after. What could further push down its value is when insurers meddle in the repairs (Think of them pushing for their suggested repair shop.) that end up making your vehicle still largely impaired after work on it has been done. It's a good thing this is hardly used in settling or resolving property damage claims.

The acceptable standard it seems is the third category which is Inherent Diminished Value. A vehicle's resale value is reduced because it now bears a history of damage. Think of it this way: if your vehicle is going against another vehicle of the same make and year but with hardly a scratch on it, which do you think the buyer will go for? Or looking at it another way, which one would you go for if you happened to be the buyer?

Your best-hoped for resale price is relying on the kind of repairs performed on it. If it benefitted from optimal repair work, chances are you can still get a fair value for it. However, if sub-par work has been done on it, add repair-related diminished value mentioned earlier to your worries.

There are other factors in determining what your vehicle's diminished value or resale worth is. One is your type of vehicle. If yours happens to be a rarity that car collectors would want to possess, then this might give you a bit of leverage in the negotiations. How that leverage will play up will depend on its condition prior to an accident or force majeure and the harshness of the punishment it endured. How rigorous and exacting the repairs will be done on it will determine its final value.

Diminished value does diminish one's hopes of a good resale value for his vehicle. There's no going around this. So what's the upside to this story? As far as it depends on you, drive safely and try to keep your vehicle in good shape at all times.

Is Carfax Reliable?

When you buy a new or used car, you want the best deal for your money. Who doesn't? Many people rely on auto history reports to give them all the information they need. One of the most popular names in the business is Carfax. Is Carfax reliable? Can you trust Carfax enough to use them as the sole factor in purchasing a new vehicle? When buying a new or used vehicle it is in the buyer's best interest to do their homework. However, there are various reasons why you need to do more than buy a vehicle based on its Carfax report.

The Case for a Pre-Purchase Auto Inspection

 

It is extremely important to get a pre-purchase car appraisal from a trustworthy company before buying a new vehicle. Carfax may not tell you everything. Simply, because not everything is reported. One extremely important thing to be aware of when buying a new vehicle is that even though it has a VIN number, it may not be registered. If a car is not registered, there will be no Carfax report. Also, when it comes to new cars, most states do not report odometer readings to Carfax or information sent to Carfax could be misprinted. Any mistake can be made by an accidental human error. You should not rely on Carfax even for new vehicles, always get a pre-appraisal before purchasing a new vehicle. That is the only way to be completely sure about anything.

Carfax creates its report by collecting data from various sources. One source being the title history. This information comes from the National Motor Vehicle Title Information System. Not all states participate in the NMVTIS so, you could be missing a lot of valuable information. Carfax also gets their information from insurance companies, auto repair shops, and police accident reports. The problem with this is simple, not all accidents are reported, not all repairs are reported. Sometimes a car could get in an accident leading to internal problems that the owner isn't aware of. Therefore, selling you a used car with issues that nobody was ever aware of.

Carfax is supposed to report the title history, all vehicle registration and title owners, the odometer readings, any recalls, all car accidents, and the airbag deployment history. The chances that all this information is reported and 100% accurate is highly unlikely. 

 

So, Is Carfax Reliable?

 

By no means should this be interpreted as Carfax not being legitimate or purposefully providing false information. However, if a car comes back with a clean auto report, that may not necessarily be true. It is not any fault of Carfax or other vehicle reporting services. The bottom line is to do your homework, check what you can, test drive the automobile whether it is new or used, and have a mechanic look at it. This should all be done before purchasing. Once you have taken all the necessary precautions when buying a vehicle. You can now feel secure about your purchasing decision.

Where to Get a Pre-Purchase Inspection

 

When selecting a third party for your inspection, you need to partner with a company you can trust and that has your best interests in mind. Hansen Price has a track record of professionalism and a list of satisfied customers to back up their claims. Contact them today online or by calling 1-888-706-4530.

Tips on How to File a Diminished Value Claim

Here’s the lowdown on claiming a diminished value claim from an insurance company. That claim might never see the light of day. And don’t expect these insurers to be all congenial and cooperative when you present your claims; they will do whatever it takes to wrangle their way out of it.

It’s pretty much in the same vein how unscrupulous HMOs with devious medical directors would operate when trying to deny you your health insurance benefits. You are entitled to these and at the same time you’re not. If you come unprepared to substantiate your claims, then be prepared to hear all sorts of excuses until you’ve had enough and you are forced to just drop your case. Here then are some helpful pointers on how you can make a diminished value claim to help you recover a significant fraction of your losses.

Before going that route, make an honest if not impartial assessment of your vehicle. Is it really worth all that trouble pursuing a diminished value claim? Consider this as an essential pre-step before you proceed to take on the next few steps. If your vehicle has been around and seen the worst of times, then maybe it’s better to just stand down. If lawyers have to be dragged in the process, your eventual legal fees could far exceed the value of your seasoned yet ailing vehicle. It’s best to cut your losses immediately.

However, if you’re talking about a brand new luxury sedan that’s just rolled off the showroom but had the misfortune of undergoing unforeseen circumstances, then this would be worth taking the fight to the insurer. But before that, know to whom you’re taking the fight. In this regard, it’s important to make the distinction between first-party claim and third-party claim.

Research about your state’s laws regarding how they measure diminished value and their stance on first-party claims versus third-party claims. First party is when you ask your insurance company directly for diminished value claim. Third party is when you ask the other party’s insurance company to shoulder the claim. Naturally, third-party claims only work out if you’re the victim of the other party’s lapse in road judgment.

However, for first-party claims, you can expect insurance companies to give you the turnaround if not ignore you outright. But here’s how you can get them to cooperate bit by bit. Tell them about your case and ask for the best repair shop affiliated with them. In this case, don’t let that damage linger. Have your vehicle repaired immediately and hope that the shop recommended (nay, imposed) by your insurer will do a brilliant job of restoring your vehicle. Later when you come across the term “Repair-Related Diminished Value,” you would appreciate the difference between going all out and going cheap on those repairs.

While your car is in the shop for rehabilitation, this would be the best time now to research on the value of your vehicle prior to the accident. This would serve as your take-off point in determining its eventual resale value.

 Getting a Diminished Value Appraisal

After your car has rolled out of the repair shop, it’s now time to get a professional appraiser. They will arrive at an estimate of your car’s current value based on what it was worth prior to the accident (which could be largely based on your research) and what it’s worth after repairs. What is crucial here is the quality of repairs done on your vehicle. If it turned out that the shop that your insurance company recommended did hasty repairs that failed to restore your vehicle at least close to its original form, then you can be loading up your ammo when it’s finally time to file your claim. It’s important that you have this appraisal documented so you can make a very good case.

Making the Diminished Value Claim: Outcomes

Here are two possible scenarios when you finally make your diminished value claim with your insurance company or the third party’s insurer. They can reject it outright or offer compensation less than the diminished value claim. Do not flinch or back down or, worse, give in to their persistence. If they remain adamant in short-changing you, then off you go to your next step which is to take your case to a small claims court. If the diminished value claim is in the area of thousands of dollars, then this would be worth the trouble.

However, if the filing fees and legal costs will prove much more than the diminished value claim, most especially if you’re trying to fight for a vehicle that has seen better days, then maybe it’s best not to pursue the claim at all.