“It’s been in an accident…”
This Lexus ES300 sustained over $13,000 in collision damages. Its resale value was diminished by $12,000

DV: What Is It?

Simply put, diminished value is the difference between the market value of a vehicle prior to collision or other type of damage, and its value after. Ask yourself: if two identical cars are examined, identical mileage, options, and color, one of which was heavily damaged and repaired which car is worth more? Which is worth less? Which would you want?

Collision damage causes severe loss of value at the point of impact. Repairs restore value, depending on the quality of the repair work. However, all cars will suffer loss in value to some extent, depending, of course, on its pre-loss value, mileage, general condition and so forth.

Compounding this problem, many states require that damage be disclosed at trade-in or sale. Furthermore, there are lemon laws in most states written to protect unsuspecting consumers from buying potentially unsafe cars, flood cars, and rebuilt total losses. The market for used cars and trucks simply does not support collision damage. In fact, in the auto dealer business, vehicles with structural and/or frame damage must be disclosed and are auctioned separately.

Consumer Attitudes

Most people’s first question when purchasing a used car is to determine whether the car has been in an accident. Because of the collision repair is subject to so many variables in terms of quality issues, data shows many people don’t receive a good repair. Whether due to incompetence, or deliberate acts of fraud, chances of getting a quality repair can often be the luck of the draw.

Due to relentless cost cutting on the part of the claims industry, there has been a race to the bottom among body shops in an effort to attract insurance business. The result is poor quality and unsafe cars being put back on the road. While there are honest body shops that deliver high quality work, it is very difficult to detect a good repair from that found on an utterly unsafe car. The problem is that many repaired cars look just fine. Large corporate fleets collect for these losses. Why shouldn’t you?