When a vehicle is damaged in an accident and then repaired, the resale value may be less than a comparable vehicle that has not been damaged. In other words, the damage results in a reduction, or “diminution,” in the market value of the vehicle, even after the repairs have been completed.
In Colorado, an insured’s claim for this reduction in value may be made against a third party that negligently caused the damage to the insured’s vehicle, or it may arise from a first-party claim against the physical damage coverage under the insured’s own automobile policy.
Types of Diminished Value
There are three types of diminished value:
- Immediate Diminished Value: The loss in value immediately after an accident and before any repairs are made. It is the difference in market value immediately before and after an accident caused by the at-fault motorist. In many states, this is the measure of damages for injury to personal property.
- Inherent Diminished Value: The loss in value of a vehicle that remains after it is completely professionally repaired. This loss of value results from the simple fact that the vehicle has been in an accident. Given the choice of two identical vehicles on a car lot, the consumer will typically choose the vehicle that hasn’t been involved in an accident over the one that has been damaged and repaired.
- Repair-Related Diminished Value: The additional loss in value of a vehicle that has been incompletely or poorly repaired. This includes anything from simple cosmetic damages that remain after repair or major mechanical or structural deficiencies.
In Colorado, the statute of limitations for diminished value claims is two years from the date on which the accident occurred. You cannot submit a diminished value claim in Colorado if you were at fault for the accident, or if the damage was caused by something other than the collision.
Bringing a Diminished Value Claim
Colorado law might allow for diminished value claims, but you can’t expect to simply put in the claim with the at-fault driver’s insurance company and get a check. You will need proof of the diminished value, and even then, the insurance company might still reject your claim.
A procedure commonly followed when making a diminished value claim usually requires taking the following steps:
- Locating an auto-value expert (many dealerships have them on staff). They are typically the individuals who evaluate trade-in value.
- Asking for a very specific appraisal of your car just before the accident.
- Obtaining the value of the vehicle in its current condition (taking the accident into account) after your car has been completely repaired.
If the car is worth less after the accident and after it has been repaired, this is the evidence of diminished value that you will need when you bring the claim.
You can either present this evidence to the at-fault driver’s insurance company and ask for damages, or file a lawsuit against the other party with the help of an experienced Colorado personal injury attorney.
Image by Michael Pedersen.