What is the basis of a Diminished Value Claim?
Inherent Diminished Value is the sudden and unforeseen loss of value of a vehicle due to having sustained collision damage and subsequent repairs. This is not to be confused with normal depreciation that occurs to a vehicle over time. Inherent diminished value assumes that the vehicle has been repaired to industry standards. Although vehicle repair technology is of a high level, there is still a difference between the manufacturing process and the repair process. Consumers generally believe that a vehicle damaged by collision will never be the same and has a stigma that renders it less valuable than a similar vehicle with no damage history. With most states requiring disclosure of collision damage, airbag deployment and significant refinish work, as well as consumers having access to vehicle history reports, a vehicle’s damage history will follow the vehicle wherever it goes. As a result, consumers will not pay the same price for a wrecked and repaired vehicle as they will for a vehicle with no damage history.
Inherent Diminished Value is not a quality of repair issue of a specific vehicle. It is a loss of value based on general public perception that a vehicle repaired by a body shop is not in exactly the same condition as prior to the collision, that the refinish work done is not as good as that done by the manufacturer and that the structural integrity of the vehicle may have been compromised. As a result of these perceptions, a collision-damaged vehicle will suffer from a loss of value perception and therefore a loss of marketability, which translates into a lower value.