Diminished Value

“Diminished Value” is the legal term used to describe the difference between what a car was worth before it was involved in an accident vs. what it is worth after having been involved in an accident; and after having been repaired.  If the car is worth less, even after having been repaired, and the accident was caused by someone else’s fault, then the owner of the vehicle can assert a claim for the diminished value of the car.

The extent of damage and resulting repairs required are the most important factors in determining whether someone has a diminished value claim, or not, and, if so, the amount of compensation owing.  By way of hypothetical example, if someone’s car is rear-ended at 2 miles per hour and sustains, say, $400.00 worth of damage, they don’t have a claim for diminished value to their car because the repairs will restore the car to its pre-accident condition.  In contrast, if someone’s stopped car is rear-ended at 20 miles per hour, and sustains $7,000.00 worth of damage, and the frame of the car is damaged, then it is virtually certain that they will have a diminished value claim.  That is so because whenever the owner sells or trades-in the car, it will not be worth as much as it was prior to the accident, due to the fact that it was in the accident.  This is the “loss” that one can recover for through a diminished value claim.

There is no “formula” for determining the extent of diminution in value that a given car sustains due to having been in a significant accident.  Insurance companies often refuse to acknowledge the validity of such a claim or minimize it by: (1) contending that the car was worth less than it actually was before the accident; and/or (2) arguing that the value was diminished only by a very modest percentage.  Car dealers and wholesalers, in contrast, routinely tell us that a car involved in a substantial collision (i.e. where the frame was damaged) is worth 40 – 60% less than what is worth prior to being involved in the accident. There are professional appraisers who specialize in providing objective diminished value estimates for purposes of claims and litigation.

Depending on the circumstances of a given case, we are sometimes able to include an attorney fee claim (ORS §20.080) in a lawsuit seeking to recover for diminished value.