Types of Diminished Car Value
Diminished Value has been much talked about in the last few years, leaving as many unanswered questions as factual conclusions. Diminished value is a term which is still not readily accepted by all insurance companies, leading them to question the accuracy of the appraisal. There are three types of diminished value to consider: Inherent Diminished Value, Instantaneous Diminished Value and Repair Related Diminished Value.
Inherent Diminished Value the loss of car value or the worth of your car occurring because your car has an accident history. CARFAX® or AutoCheck® services will provide an accurate vehicle history for consumers and dealerships alike and they are frequently used by prospective buyers to check for this car value accident history. If your car has an “accident history”, your buyer will either ask for a lower price or scuttle the deal completely! You have just experienced Inherent Diminished Value first hand…you have just lost money from that car accident!
Instantaneous Diminished Value occurs at the moment of an accident. This is usually referred to as the “cost of repairs” which your insurance company pays to restore your vehicle back to pre-accident condition…but not necessarily the pre-accident car value.
Repair Related Diminished Value is usually caused by poor repairs or the use of inferior parts. We run into this in classic cars as well as late model cars which have been repaired. These cars may have been totally original and when wrecked, replacement parts were used from another vehicle; or the repairs were just poorly done. An insurance company utilizing Aftermarket Replacement Parts (cheap parts, usually made over seas) on your late model car also causes this loss of car value. In either case, the car value has decreased because of the accident. Repair related diminished value is an issue to be resolved between you and your repair shop.
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