Loss in value, also referred to as “diminished value” or “diminution in value,” describes the lowered value of an item, in this case, an automobile, after it has been in an accident.

This loss of value is primarily at issue in insurance claims made following the accident. An automobile loses value after it is damages in an accident. How much value it loses will depend on the nature of the damages.

If Driver A is at fault in an accident, they will be responsible for the loss of value of their own vehicle. However, if Driver B is at fault, Driver A may try to claim that Driver B is responsible for the loss in value. Driver A might then file a claim with Driver B’s insurance company (or with their own insurance company), to get them to compensate for the loss.

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When Can I Recover for Loss of Value in an Automobile?

Some states have statutes allowing for Driver A (the driver free of fault) to file the loss of value with their own insurance company. However, most states allow Driver A to file the loss of value claim with Driver B’s (at fault driver) insurance company.

However, the insurance company is not required to pay loss in value just because Driver A claims it, and Driver A bears the burden for proving their loss. You must show:

  1. You were in an accident;
  2. You were not at fault;
  3. You must show that your vehicle’s value went down after the accident; and
  4. You must show that you suffered damages as a result.

In some states, the proof that the vehicle's value went down because of the accident is easy to prove. What is more difficult is the proof that you suffered damages. Some states require you to show that you planned on, or were considering selling the vehicle before the accident. If you never planned on selling the vehicle, what difference does it make that is it worth less?

How Much Can I Recover?

The amount of recovery for loss of value is generally restricted to the fair market value of the vehicle before and after the accident. Determining the fair market value is a very difficult task. 

Some states will look at an insurance company's comparable payments, while others will look at an independent source like the Kelley Blue Book value. Insurance policies may also have clauses that limit when and what can be recovered for loss in value.

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Are There Any Defenses?

As already stated, each state handles loss of value damage claims differently, and as such, different defenses to a claim are available. The most common include:

  • Contributory negligence;
  • The vehicle was restored to comparable condition;
  • The value of the car was not lost in the accident;
  • The car was totally destroyed; and
  • The value of the car was less than the amount being asked for.

Do I Need an Attorney?

If you have been in an accident and have questions about diminished value, or are having difficult dealing with insurance companies and making a loss of value claim, you may want to contact a personal injury attorney who specializes in insurance law, and who can assist you with these issues.