Diminished value

Article summary

Diminished value or diminution in value are the terms generally used to describe the loss in a property's market value after it was damaged in an accident and repaired. Diminished value is most often associated with automobiles but it is applicable to other property of value including real estate or collectibles such as jewelry and artwork. If a property was damaged and repair failed to restore it to its original market value then said property has suffered diminished value. Unlike depreciation, which is an anticipated and predictable loss in value over time, ‘Inherent Diminished Value’ is a loss in value due to a specific, sudden and unexpected negative occurrence. Diminished value of an automobile following an accident may occur in one of two ways (or a combination thereof): (1) Inherent diminished value (2) Repair-related diminished value Inherent Diminished Value assumes proper repair has been completed and is defined as the amount by which the market value of the repaired vehicle is less than the market value of the same vehicle before the accident. Almost every vehicle that experiences an accident suffers a certain amount of Inherent Diminished Value. Repair-related Diminished Value is the loss of market value due to improper repair of the vehicle. This type of diminished value is rare.…

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