What is DV?

What-Is-Diminished-ValueDiminished Value, What is it?

Diminished Value (DV) is the loss in market value of a motor vehicle from its pre-wreck fair market value due to the vehicle being in a wreck and requiring cosmetic and/or mechanical repairs. Diminished value may be attributed and applied to various Motor Vehicle Claims.

Diminished Value is in no way Depreciation!

Depreciation is defined as: An anticipated decrease or loss in value sustained over time due to age, wear, or market conditions.

Diminished Value can best be defined as the result of a sudden and unexpected loss in economic value resulting from a sudden and unexpected loss or occurrence.

Who’s Entitled To Diminished Value?
Should your damages be the result of another’s negligence, you may be eligible to collect your Diminished Loss in vehicle value from the at-fault party or their insurance carrier, if applicable. Diminished Value Claims are recognized by most states.

“An insurer also may be obligated to pay a third party claimant for any loss of market value of the claimant’s automobile, regardless of the completeness of the repair, in a liability claim that the third party claimant may have against a policy holder. Further, an insurer may be obligated to pay first party claimant under the uninsured/under-insured motorist coverage provisions of the policy, for any loss of market value of the first party claimant’s automobile, regardless of the completeness of the repair.” April 6, 2000: Commissioner’s Bulletin #B-0027-00 by David Durden, Texas Department of Insurance.”  April 6, 2000: Commissioner’s Bulletin #B-0027-00 by David Durden, Texas Department of Insurance.

“The difference between the value of the chattel (personal property) before the harm and the value after the harm or, at the plaintiff’s election, the reasonable cost of repair or restoration where feasible, with due allowance for any difference between the original value and the value after repairs, and the loss of use”  November 4, 1997: Legal Memorandum by John R. Dunphy, Florida Department of Insurance

“After an accident, and after repairs have been made, if a vehicle is worth less than it was before the accident, its value has diminished. That difference in market value is called diminution of value. Most auto insurance policies exclude coverage for diminution of value.”  As per the State of Oregon, Division of Insurance,

 “The difference in the dollar amount of what your car would have sold for without damage, and the amount it will likely sell for with the repaired damage.”  “Fact Sheet” prepared by the Washington State Insurance Commissioner

“If your damages are being paid by the “at-fault” driver’s insurance, you may be owed compensation for diminution of value. You must prove that the value of your vehicle diminished as a result of the accident. Evidence might consist of before and after photos; Blue Book and/or N.A.D.A. Book Value; CarFax Report before and after; appraisals and/or a receipt for the fair market value sale of the vehicle, etc.”

 

Listed below are Three Basic Types of Diminished Value along with a brief explanation.

“Inherent Diminished Value” in motor vehicles is based upon a widespread belief whereas: “Once damaged, it will never be the same again”. This stigma is attributed to the common instances over time whereas “inherent” appearance and operational deficiencies often times remain, even after proper and thorough repairs have been performed.

Additionally, inherent diminution of value occurs at the precise time of the loss and sustaining the resultant damages. The true measure of a damaged vehicle’s inherent loss in value can be measured as the difference in the value of the property before the loss to that after the loss, prior to or after repair.

Repair activities (i.e. repair, replacement of parts, refinishing etc.) merely aid in the recovery of a vehicle’s appearance, function and value, relative to the quality and thoroughness of the performed repair.

Inherent loss or diminution in value is real and continues to exist simply because, for the most part, no reasonable and prudent buyer is willing to pay the same price for a vehicle with a history of damages as they would for one never having been damaged. It is an industry standard for appliance and electronic outlets to offer and have deep discounts for scratches and dents on appliances, electronics. Basic consumer thinking would equate the same thought process to a wrecked and repaired motor vehicle.

“Inherent Diminished Value” is based on public awareness that even if a damaged vehicle is repaired to the best of human ability, it will still exhibit remaining deficiencies and inconsistencies from the pre-loss condition of the vehicle prior to the wreck. These deficiencies include, but are not limited to:

  • Weaker structural components that appear cosmetically sound
  • Impossible to duplicate factory seams, sealers, and finishes
  • Telltale signs of repair, such as paint missing off the heads of bolts etc.
  • The unavailability of some factory decals, and markings (e.g. VIN labels)
  • Undiscovered kinetic damage throughout the vehicle
  • The increased likelihood of a mechanical failure due to direct and/or kinetic damage
  • The effect that the repair will have on the future deployment of the SRS (air-bag) systems
  • The unfeasibility of duplicating immersion and/or robotic applied rust-proofing techniques
  • The loss of factory warrantees and eligibility of Certified Pre-Owned (CPO) vehicle warranty programs
  • Wreck Damage and/or Collision Damage noted on CarFax and Auto Check Reports

“Insurance Related Diminished Value” is based upon and resultant from remaining flaws, defects, and damage, which, through their involvement, the insurer had failed or neglected to fully and/or properly address. Several examples of Insurance Related Diminished Value causing issues are as follows:

  • The installation of inferior replacement parts
  • Mismatched paint finish (e.g. whereas no consideration for paint matching activities were provided for)
  • Remaining repair related residue, dirt, etc.
  • The lack of replacement decals, labels and markings (i.e. belt routing, engine displacement etc.)
  • Overlooked or disregarded kinetic damage throughout the vehicle
  • Overlooked or disregarded mechanical damages
  • Overlooked or disregarded safety issues (i.e. inspection-testing of belts, SRS systems etc.
  • No allowance for application of factory sealers, sound deadening, rust proofing etc.
  • Gaps in body seems and door jams
  • Wind noise while driving
  • Water leaks when washing and/or during rain

When an insurer negotiates the settlement of an automobile damage claim they will typically provide an estimate of repair which outlines the specific procedures, parts, and materials of which they are willing to provide for to the claimant or insured. One of the following entities will generate this itemized listing of insurer-authorized repairs:

  • An “in-house” appraiser, who is hired as a full time employee of the insurer, then trained to assess collision damage in accordance with the company’s policies and procedures.
  • An “independent” appraiser who is hired as a subcontractor to assess the damage on behalf of the insurer and does so based upon the insurer’s mandates and/or guidelines.
  • An employee of a “Direct Repair Program” (a.k.a. DRP) body shop, who agrees to prepare the repair estimates using the guidelines (parts, labor/material rates etc.) established by the insurer in exchange for the insurer’s direct referral of customers.

In some instances, the insurer will offer to pay based on the lowest of three estimates.
This may cause the level of compensation to be based upon the estimator with the least experience, inspecting the vehicle for the shortest period of time, using the poorest repair techniques, and/or overlooking the most damage. Additionally, there are those less scrupulous repairers who may intentionally underbid the repair to “seize the keys” only to submit a supplement for additional costs during the actual performance of repairs.

The installation of parts and materials, as needed to restore a damaged vehicle to its pre-loss condition in safety, function, appearance, and value to the best of human ability, has proven time and again to reduce claims for Diminished Value and other associated liabilities including, among others, costly re-repairs and avoidable ‘loss of use’.

“Repair Related Diminished Value” is based primarily upon remaining flaws and defects resulting from improper and/or insufficient repairs for which the repairer had agreed and provided consideration to complete in a workmanlike manner. Poorly performed repairs would cause the vehicle to be valued less than if it had been properly and thoroughly repaired.
A few examples of such repair related flaws and defects are as follows:

  • Poor structural, and/or cosmetic welds
  • Frame/structural repair listed on the insurance estimate, but not completed properly and/or thoroughly
  • Telltale signs of repair, wavy body work, sand scratches, paint overspray etc.
  • Damage and/or removal of irreplaceable factory decals, and markings
  • Undiscovered, overlooked or disregarded kinetic damage
  • Undiscovered, overlooked or disregarded mechanical/electrical damages.
  • Undiscovered, overlooked or disregarded damages/testing SRS systems.
  • The failure of duplicating factory appearing sealers, sound deadening, rust proofing etc.
  • Remaining flaws (paint-runs) and defects (dirt, etc.) in applied finishes
  • Mismatched color after “tinting” and “blending” processes were provided for
  • Sanding scratches on moldings, glass, and trim
  • Gaps in body seems and door jams
  • Wind noise while driving
  • Water leaks when washing and/or during rain

Many average consumers are perfectly capable of finding such remaining damage and/or repair related flaws and defects, as well as residual indicators as may be found in a high quality repair. In many instances, only the trained eye of professionals, experienced in the repair, purchase and/or sale of motor vehicles may find such remaining flaws and defects. Let Vehicle Value Experts give their professional opinion as to where you stand with your wrecked motor vehicle.

Important Notice: Vehicle Value Experts does not provide legal or financial advice and strongly recommend each user of this site seek a qualified professional familiar with such issues as outlined in this site prior to making a decision as to such .For further clarification regarding the use of this site please visit our “Disclaimer“.

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