What is Diminished Value post Accident
You Mean my Car is Worth Less After an Accident?
Short Answer…YES! Longer Answer, Read on…Have you ever shopped for a used car? If so one of the questions you ask is “Has it ever been in an accident?” And if it has what is your reaction? Consider this. You want to purchase a used 2011 Honda Accord and you are lucky enough to find tow identical used Accords for sale…both identical except one of them has been involved in an accident and was repaired at the highest quality auto body shop in town. the repair cost was over $12,000. Same car, same mileage, even same color. One was never damaged and one was damaged and fixed. Which car would you pick? The repaired Accord is not worth the never repaired car so the repaired car has a diminished value.
Diminished Value Post Accident?Diminished value occurs in Arizona when a vehicle is involved in an accident and, as a result, incurs physical damage, whether it is structural or cosmetic. Even if the vehicle is repaired, it is still worth less money than it was worth before the auto accident occurred. This is referred to as diminished value. When selling or trading a vehicle, Arizona requires disclosure of all damage caused by prior accidents that the vehicle has been involved in. Thus, most customers would favor a vehicle with a clean record over a vehicle that has been involved in a prior accident. This means that individuals end up receiving less money for their vehicle than if their vehicle were not involved in an accident in the first place. Three main types of diminished value in Arizona exist when assessing the amount of a vehicle’s diminished value. However, not all three types of diminished value are used when legally compensating individuals for the diminished value of their vehicles in Arizona. 1. The first type, inherent diminished value, is the loss of market value due to the fact that a vehicle has been involved in an accident. Inherent diminished value is the most widely recognized and accepted form of diminished value, and is also the most common basis upon which any supplemental forms of diminished value would be added. 2. The second type, repair related diminished value, is the depreciated amount of a vehicle as a result of improper or incomplete repairs, poor quality repairs or unrepaired items. Generally, the amount of repair related diminished value is determined by the overall quality of the repairs. Repair related diminished value is a supplemental form of diminished value that may be added onto a vehicle’s inherent diminished value. 3. The third type, insurer related diminished value, occurs when an insurance company insists or authorizes the use of aftermarket parts or parts not manufactured by the original manufacturer.
How Do I Calculate Diminished Value in Arizona?Arizona law does allow individuals to collect diminished value when their vehicles have been in an accident. However, diminished value claims must be proven. Those vehicles which are relatively new, have sustained significant damage, and were not previously damaged in a prior accident have the greatest chance of success. Other factors do impact a vehicle’s diminished value, including its mileage, marketplace demand, value of the vehicle undamaged, and the vehicle’s condition before the accident. Because every vehicle is different, the amount of diminished value varies accordingly, and therefore cannot be systematically calculated. Thus, a diminished value expert who has full understanding of the marketplace is needed in order to accurately calculate a vehicle’s diminished value following an accident.
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