Diminished value and minimizing what your car loses after a wreck

Hey folks! This is Mike and Tom from Pacific One Collision and Restoration.

Welcome to another Q&A session where I answer questions from you all on the internet.

Today's question is:

"Diminished value and minimizing what your car loses after a wreck"

Summary:

Mike confirms that a repaired car can be worth less to its next buyer, but explains that several factors matter. The first is whether the accident was an insurance claim and was reported, because a reported accident shows up on a Carfax report, which can lower the car's value to a future purchaser. How much it matters depends on the severity and, crucially, the repair quality; a good shop returns the car to pre-accident condition so no one could tell it was repaired unless they run the Carfax. Minor, unreported fender benders may never appear on Carfax unless there was a police report. He defines diminished value as what the car is now worth to someone else given the known accident history, and notes recovery options exist but are very difficult to obtain, usually amounting to a small percentage that rarely justifies hiring a lawyer, though pursuing it is legal.

Answer:

After a car's been in an accident and has been repaired, it can be worth less to the next purchaser of the vehicle. That is a true statement. However, there are a few things that come into play. The first thing is, was it an insurance claim and was it reported? Anytime it's reported to the insurance company as an accident, it will show up on a Carfax report. So when the purchaser of that vehicle goes to buy it, they see accident history now, and to that person it may be worth less. It really depends on the accident and the quality of the repair that was done. If it's a good shop, they're going to get it to pre-accident condition, and nobody would be able to pick up that it was ever repaired unless they ran that Carfax report. Customers that come to us with minor fender benders, or in some cases significant ones, and don't report it to insurance may not necessarily ever show up on a Carfax report, unless there was a police report. So there are a couple of things that go into determining whether it's going to have what's called diminished value. Diminished value is, now that we know the car's been in an accident, what is the value of the car worth to somebody else? There are options to get recovery for diminished value. It is very difficult to get, from what I've seen in my career. It can be done, I have seen it done, but it is a challenge, because it's only a percentage of the repair or the value, and it usually ends up being a small number. It's not typically worth hiring a lawyer or going through that exercise to fight for it. However, each person is different. You may choose to go after diminished value. It is legal to do so, but it can be quite challenging.