My car was in an accident in which it was hit from behind. Luckily no one was hurt but about $8000 in damage was done, including a need to replace the rear quarter panel.
I hear that even if it’s totally repaired, if I go to trade it in in a few years, it will be worth less than if it had never been damaged.
Is this true?
Since it was the other guy’s fault and his insurance is paying for the repairs, shouldn’t they pay extra to make up for the difference in resale value?
The first question, is it worth less than before the accident even after repair? Of course it is. If you look at two cars on Carfax, both the same make, model and mileage, and one has a major accident on its record, which one will you pay more for?
The second question, should the other guy’s insurance company pay more to compensate you for the loss of value? I would say yes. Unfortunately for you, in most cases the law says no. Google “diminished value” and weep.
Bill hit it. Most(all?) insurance policies specifically exclude compensation for diminished value(DV) for the vehicle covered by the policy.
When you’re not at fault and the other driver’s policy is paying for your loss, however, DV can become an important issue. And it’s a tricky one because, while it’s not really disputed that DV is a legitemate claim, it’s damn near impossible to quantify it. The only real way to do it is to consult a professional vehicle appraiser and get him to provide one appraisal for the vehicle in pre-loss condition, and then to appraise the car after it’s been repaired. One recent case I saw dealt with a $60,000 Porsche which had sustained $3,000 in damage to the rear bumper. no big shakes, just replace the bumper with an OEM part and repaint it along with the trunk lid. The end result was absolutely no different than what rolled off the factory floor, but because of the collectible nature of the car the appraisal dropped by $10k simply because Carfax showed a collision loss of an unspecified amount.
Typically the only time I bring DV into my calculations it is in general terms when I’m justifying my decision to total a vehicle rather than repair it. A complete frame replacement on a 2008 pickup worth $30,000 may only cost $10,000 but trying to convince a jury that the resulting DV would be negligible is just not something I’m prepared to attempt. Because I wouldn’t pay full price for a 2008 with a replaced frame, and I know damn well the car will be to spec when it leaves the repair facility.
So … short answer: Yes, DV is ferreals and it’s tough to receive compensation for because it’s nearly never feasible to prove how much is owed.