Two Types Of Diminished Value Claims (and why they are important)

There are several types of diminished value claims.  There are two that are important to understand when talking about making a claim for diminished value after a car accident.

When a car is damaged in an accident due to the negligence of another, a claim for property damage arises. Usually, the car is estimated by the carrier for the at fault driver and payment is made for the repairs by the insurance company of the at fault driver.

A claim for property damage includes a claim for diminished value if it is made by the wronged party.  Here is where the two types of diminished value claims becomes important.

There is a claim for accident related diminished value, and possibly a claim for repair related diminished value.

The claim for accident related diminished value is because after the vehicle is repaired to its pre accident condition, it still has lost value because of the fact that it has been involved in an accident.

The claim for repair related diminished value arises if the repairs done to the vehicle were not done correct.  In other words, the repairs did not return the vehicle to its pre accident condition, though they could have.  This makes the vehicle worth less, because it was not repaired correctly.

Why is it important to know the difference?  Because a claim for accident related diminished value is made against the at fault party and can only be made after repairs are fully completed.  A claim for repair related diminished value is made against the repair shop, with the remedy often being further repair or the cost of further repair.

To sum it up, this is the reason why a claim for accident related diminished value is made after a car is repaired to its pre accident condition.  If it is not, then the claim may be hampered by the defense that the diminution of value was due to the repairs and not the collision.


What Is A First Party Claim And Why Is It Important To Diminished Value Claims?

A quick search of the internet will make you very confused about whether most States allow a claim for diminished value.

The answer to the question: Is a diminished value claim allowed in XXXX State, is impossible to give unless you first clarify what type of diminished value claim are you making.  Is it a first party diminished value claim or a third party diminished value claim.

First Party Claim

A first party claim, at least in the context of automobile accident claims, is a claim made by someone against whom they have a contractual relationship.  A first party claim is made against your own automobile insurance company.  Claims made against your own insurer can include a claim for collision repair, a claim for uninsured motorist coverage or a claim for medical payments.

These are all first party claims when they are made by the insured against their own insurance company.

Third Party Claim

A third is a claim made against someone whom you have no contractual relationship.  In the context of automobile claims this is usually the person (and/or their insurance carrier) that caused the collision.  Also known as the negligent party or the tortfeasor.

Why is this important to diminished value claims?

Because most states either do not allow a first party diminished value claim or they permit insurers to include language in a policy precluding a first party claim.  So when someone says a diminished value claim is not allowed in this or that State, they are likely referring to a first party claim.  Because

Because there is a contractual relationship between an insured and the insurer, they can include or exclude any claim they want as long as the State allows it and the insured signs the contract.

In a third party claim, there is no contractual relationship between an injured or damaged person and the other persons insurance carrier.  Therefore an insurance company can bnot preclude a injured or damaged person from making a claim against their insured for diminished value.

In conclusion, when you see people saying that almost no State allows a claim for diminished value, they are referring to first party claims.  Almost every State allows a third party claim against an at fault driver for the diminution of value their negligence caused.


Don’t Let The Insurance Company Say No To Diminished Value

One of the greatest areas of confusion in car accident claims surrounds making a diminished value claim.  The reason for this confusion is  related to the lack of knowledge surrounding the right to make a diminished value cailm and unfortunately more likely due to insurance companies and the at-fault driver’s desire not to pay money to make the victim whole again.

Diminished value is the loss of value a car suffers after a car accident and after the car is repaired.  Diminished value is inherent to the vehicle and not related to the repairs. Diminished value is a stigma.  A car that has been in an accident, even after repaired, is still worth less than a the same car that has not been involved in an accident.

Every State permits a third party claim for diminished value.  What this means is that if you were not at fault in the accident, you can claim diminished value from the at-fault driver or their insurance carrier.  The at-fault driver or their insurance company is the “third party”.

Only a handful of States allow a first party diminished value claim. First party claims are a claim against your own insurance policy.  Therefore if you were at fault in the accident, you can not make a diminished value claim unless you live in one of the few states that permit first party claims.

It is is extremely simple.  If you were not at fault, don’t let the insurance company tell you you can not make a diminished value claim.

Where To Find A Diminished Value Report

The word is out!  More and more consumers are learning about their right to claim diminished value after a car accident.  Fortunately, there is a developing market of diminished value report producers to supply people with the evidence they need to make a diminished value claim.

To make a diminished value claim you need evidence of your loss.  Without selling your vehicle the best evidence is a professionally prepared diminished value report.

Online, there are numerous companies that will prepare a report for a fee.  Fees range from under $50 to several hundreds of dollars.  Using an online company is a good idea if you do not plan to go to court, even if the claim is denied.  Another great use of an inexpensive online company is to buy an inexpensive report to see how much your claim might be worth.  This is helpful if you have a borderline claim (not a lot of damage or an older car) and don’t want to spend hundreds to determine if the claim is worth making.

If you are certain that you will follow the claim to the end (a court date if needed), a local company might be a better choice, especially if your jurisdiction requires testimony from the expert.  Local companies can be found by searching for auto appraisers in your local directories.

Diminished Value Is Like A Stigma

When you car is damaged in a car accident it loses value.  This loss of value remains even after the vehicle is repaired.  The car could be in perfect condition after being repaired and you might be able to fool an expert mechanic with the repairs, but the fact remains that the vehicle has been in an accident and therefore is worth less than a comparable vehicle that has not been in an accident.

For the rest of its useful life, a car will carry with it the fact that it has been in a previous collision.  This can bee seen as a stigma.  A stigma is defined as a mark of disgrace or a stain on ones reputation.  This is exactly why a claim for diminished value is recognized after a car accident.  The stigma of having been in a previous car accident will forever effect the value of that vehicle.