Auto Diminished Value: A Definition

After being in an accident you may have a claim for collision and a claim for the auto diminished value, a term many are not familiar with.

Diminished value is the amount of value your vehicle has been reduced by after an accident occurs or has significant damage history. Usually this is determined after an insurance company performs an auto value appraisal. There are three types commonly accepted: immediate, inherent, and repair-related. Immediate diminished value is the difference from the value of the car immediately before damage has occurred and that immediately after. Inherent diminished value assumes repairs done are optimized, and it is the difference between the value of the vehicle after repair and what it was before the damage. Repair-related diminished value is any additional amount the vehicle may be reduced by less than optimal repairs.

Knowing these terms can help when you're faced with the aftermath of an accident. Diminished value is one term most drivers hope they never have to become familiar with.