Accidents Happen, and So Does Diminished Value
Car enthusiasts understand the inherent value of a automobile decreases if it is involved in a major accident. The decrease in value is known as Diminished Value and your loss is recoverable from the insurance company if you are not at fault. When frame damage is involved, the market value of the automobile decreases significantly according to appraisers and dealers although insurance companies do not appear to be going out of their way to inform you of the loss.
Here’s a few things I’ve found while researching Diminished Value that you may find helpful:
“There are several sound reasons for using retail prices to determine the pre-loss value. The vehicle owner is a retail consumer, and paid retail price for the automobile. It is also common knowledge that a dealer will not offer a retail price to a consumer when they trade their vehicle in, and they are basing their trade in price on the assumption that the consumer is going to purchase another vehicle from them. Another consideration is disclosure. If a dealer discloses the previous damage history, the chances of selling the vehicle to a prospective buyer is greatly reduced especially when there would normally be other similar vehicles available without a damage history available on the same lot. Also, a vehicle suffers depreciation in the eyes of a dealer once it has been titled and driven off the lot. Consumers should not be negatively impacted by this depreciation when considering Diminution of Value.” SOURCE: Collision Consulting
“According to a 2009 survey by AutoLoss.com, a wreck in the past could drop a vehicle’s resale value between 10 percent and 30 percent, with frame damage being a total deal-breaker for most respondents.” (SOURCE: Diminished Value Article: How much is that wrecked car worth? By Jay MacDonald • Bankrate.com)
“When a vehicle’s frame has been damaged, it may be fixable, but the financial damage is permanent. Assuming it is accurately documented, a vehicle is valued significantly less due to the stigma to consumers who are in the market for a vehicle…. Another setback related to a frame-damaged vehicle is the likelihood that a car dealership will reject it altogether. We know from firsthand accounts that certified used vehicle programs have strict standards when it comes to a vehicle’works repair history.
In 2009, CNN Money did a value comparison between used and certified pre-owned vehicles. Here are a few examples of the dramatic differences:
- Toyota Camry
Used 2007: $14,713
Certified used 2007: $18,114
- Cadillac CTS
Used 2007: $23,304
Certified used 2007: $27,892
- Chrysler 300C
Used 2007: $19,215
Certified used 2007: $22,157″
Diminished Value Recoverable in Ohio – July 24, 2007 Opinion
In Rakich v. Anthem Blue Cross and Blue Shield, 10th Dist. No. 06AP-1067, 2007-Ohio-3739 the 10th District Court of Appeals held, in a 3-0 decision, that Plaintiffs may recover for the diminished value to their car after repair.
The Rakich Court noted that the traditional measure of property damage was either the cost of repair or the difference in value between the time immediately before and after the damage, but not both. Rakich argued that while she had been compensated for the cost of repairs, she still had not been made whole. The Court’s ruling followed the common-sense argument that a wrecked-and-repaired car is not worth as much as a car that has never been wrecked, and held that this difference in market value is a compensable damage. The Rakich Court found that allowing recovery for diminished value was consistent with the standard measure of damages in a tort case: the amount which makes the plaintiff whole. Therefore, the Court permitted Rakich to recover for diminished value if she could show that the repairs were insufficient to restore her car to its pre-crash value.