What is Diminished Value?

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Basically, Diminished Value {DV} can be defined as the loss of financial worth of a vehicle due to damage. There are three basic types of DV, which can be grouped into two primary categories, and the extent of each determines the overall depreciation.

I) INHERENT DIMINISHED VALUE:
Inherent DV can best be described as "the automatic and unavoidable loss of market value simply due to the fact that the vehicle has been involved in an accident". The disclosure laws in most states make it mandatory that previous damage be disclosed, (made known), to a prospective buyer. Think of it this way: You wouldn't be willing pay as much for a vehicle that was damaged as you would for one that had never been repaired would you? The difference in the amount you'd be willing to pay for an undamaged automobile versus the price you'd be willing to pay for one that has been repaired would be considered "Inherent Diminished Value". The fact that a vehicle has a damage history decreases the market value.

II) REPAIR RELATED DIMINISHED VALUE:

A) INSURANCE RELATED DIMINISHED VALUE:
Insurance related DV can be defined as the loss of value incurred due to oversights and/or omissions by the insurance company on their appraisal. Another major factor that contributes to Insurance related DV is the mandated use of imitation replacement parts. Insurance related DV can be minimized through properly completed insurance estimates and supplements.

B) SHOP RELATED DIMINISHED VALUE:
Shop related DV is the amount which a vehicle's value is lessened due to improper or incomplete repairs, poor quality repairs, and/or unrepaired items that were compensated for by the insurance company.

Both INSURANCE RELATED DV and REPAIR RELATED DV can be addressed and minimized through re-repairs.

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Calculating Diminished Value